UNIVERSAL HEALTH REALTY INCOME TRUST REPORTS 2025 FIRST QUARTER FINANCIAL RESULTS

Rhea-AI Summary

Universal Health Realty Income Trust reported its Q1 2025 financial results, showing a decline in performance compared to Q1 2024. Net income decreased to $4.8 million ($0.34 per diluted share) from $5.3 million ($0.38 per diluted share) in the previous year.

The decline was attributed to:

• A $401,000 decrease from lower income at various properties
• A $122,000 increase in interest expense due to higher borrowings and rates

Key financial highlights:

• FFO (Funds From Operations) reached $11.9 million ($0.86 per share)
• Quarterly dividend of $0.735 per share paid on March 31, 2025
• Available borrowing capacity of $75.5 million on $425 million credit facility

The healthcare REIT maintains investments in 76 properties across 21 states, including acute care hospitals, behavioral health facilities, and medical office buildings. Management noted concerns about interest rates, staffing challenges, and potential Medicaid funding reductions affecting future performance.

Positive

• Maintained stable dividend payment of $0.735 per share in Q1 2025
• Healthy FFO (Funds From Operations) of $11.9 million or $0.86 per diluted share
• Strong portfolio of 76 healthcare properties across 21 states
• Substantial available borrowing capacity of $75.5 million under credit agreement
• Credit agreement extends until September 2028 with option for two additional six-month periods

Negative

• Net income decreased to $4.8 million ($0.34/share) from $5.3 million ($0.38/share) YoY
• Revenue declined to $24.5 million from $25.1 million YoY
• Interest expense increased due to higher borrowings and effective borrowing rate
• FFO decreased to $0.86 per diluted share from $0.90 per diluted share YoY
• Income from properties showed aggregate net decrease of $401,000

Insights

Financial Analyst

UHT reports declining Q1 2025 performance with 10.5% EPS drop and weakening property income, partially offset by dividend increase.

Universal Health Realty Income Trust's Q1 2025 results reveal concerning performance deterioration. Net income fell to $4.8 million ($0.34/share) from $5.3 million ($0.38/share) in Q1 2024, representing a 10.5% year-over-year decline in EPS. This decrease stems from two primary factors: a $401,000 reduction in property-generated income and $122,000 in higher interest expenses from increased borrowings and rates.

The trust's Funds From Operations (FFO) – the critical cash flow metric for REITs – declined to $11.9 million ($0.86/share) from $12.4 million ($0.90/share), a 4.4% drop. This metric adds back non-cash depreciation to provide a clearer picture of operational performance.

Revenue contracted by 2.4% to $24.5 million while expenses decreased marginally to $15.5 million. The company's leverage position shows $349.5 million drawn on its $425 million credit facility, leaving $75.5 million in available capacity through September 2028.

Despite these headwinds, UHT increased its quarterly dividend to $0.735 per share ($10.2 million total) from $0.725 year-over-year. However, this represents a higher payout ratio against declining FFO, potentially limiting future dividend growth flexibility if performance trends continue.

Healthcare REIT Specialist

UHT's weakening property income and rising interest costs signal operating pressures while maintaining dividend amid healthcare sector challenges.

The $401,000 decline in property-generated income is particularly noteworthy for UHT's healthcare facility portfolio. This 1.6% revenue drag suggests potential occupancy issues or tenant stress across their 76 properties spanning 21 states. For healthcare REITs, tenant operational health directly impacts rental sustainability.

UHT's forward-looking statements highlight significant sector-specific risks that contextualize these results, including staffing shortages, wage pressures, and potential Medicaid funding reductions affecting their healthcare operator tenants. These systemic challenges explain the broader revenue decline from $25.1 million to $24.5 million.

The increase in interest expense to $4.7 million despite only modest increases in borrowings indicates the impact of rising rates on the REIT's financing costs. With 82% of their credit facility utilized, further significant borrowing capacity appears constrained, potentially limiting acquisition opportunities without equity issuance.

While the dividend increase demonstrates management confidence, the higher payout ratio against declining FFO (approximately 85.5% versus 80.6% year-over-year) reduces the safety margin. The company's total assets declined slightly to $573.5 million from $580.9 million at year-end 2024, reflecting the challenging operating environment.

UHT's portfolio diversification across acute care hospitals, behavioral health facilities, medical office buildings, and other healthcare properties provides some resilience, but the broad-based income decline suggests industry-wide pressures rather than property-specific issues.

Consolidated Results of Operations - Three-Month Periods Ended March 31, 2025 and 2024:

KING OF PRUSSIA, Pa., April 28, 2025 /PRNewswire/ -- Universal Health Realty Income Trust (NYSE:UHT) announced today that for the three-month period ended March 31, 2025, net income was $4.8 million, or $.34 per diluted share, as compared to $5.3 million, or $.38 per diluted share, during the first quarter of 2024.

The decrease in our net income of $523,000, or $.04 per diluted share, during the first quarter of 2025, as compared to the first quarter of 2024, consisted of the following: (i) a decrease of $401,000, or $.03 per diluted share, resulting from an aggregate net decrease in the income generated at various properties, and; (ii) a decrease of $122,000, or $.01 per diluted share, resulting from an increase in interest expense due primarily to increases in our average outstanding borrowings and average effective borrowing rate (which gives effect to various interest rate swap agreements) pursuant to our credit agreement. 

As calculated on the attached Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule"), our funds from operations ("FFO") were $11.9 million, or $.86 per diluted share, during the first quarter of 2025, as compared to $12.4 million, or $.90 per diluted share during the first quarter of 2024. The decrease of $483,000, or $.04 per diluted share, was due primarily to the above-mentioned decrease in our net income during the first quarter of 2025, as compared to the first quarter of 2024.    

Dividend Information:

The first quarter dividend of $.735 per share, or $10.2 million in the aggregate, was declared on March 11, 2025 and paid on March 31, 2025.

Capital Resources Information:

As of March 31, 2025, pursuant the terms of our $425 million credit agreement which is scheduled to expire on September 30, 2028, we had $75.5 million of available borrowing capacity, net of $349.5 million of borrowings. We have the option to extend the credit agreement for up to two additional six-month periods.

General Information, Forward-Looking Statements and Risk Factors and Non-GAAP Financial Measures:

Universal Health Realty Income Trust, a real estate investment trust, invests in healthcare and human-service related facilities including acute care hospitals, behavioral health care hospitals, specialty facilities, medical/office buildings, free-standing emergency departments and childcare centers. We have investments in seventy-six properties located in twenty-one states.

This press release contains forward-looking statements based on current management expectations. Numerous factors, including those disclosed herein, as well as the operations and financial results of each of our tenants, those related to healthcare industry trends and those detailed in our filings with the Securities and Exchange Commission (as set forth in Item 1A-Risk Factors and in Item 7 - Forward-Looking Statements in our Form 10-K for the year ended December 31, 2024), may cause the results to differ materially from those anticipated in the forward-looking statements. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. 

Many of the factors that could affect our future results are beyond our control or ability to predict. Future operations and financial results of our tenants, and in turn ours, could be materially impacted by various developments including, but not limited to, potential significant reductions in federal funding for state Medicaid programs, and/or other potential changes, which would likely result in reduced Medicaid payments to the operators of our facilities; decreases in staffing availability and related increases to wage expense experienced by our tenants resulting from the shortage of nurses and other clinical staff and support personnel; the impact of government and administrative regulation of the health care industry; declining patient volumes and unfavorable changes in payer mix caused by deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients as the result of business closings and layoffs); potential cost increases and disruptions related to supplies and building materials resulting from changes in laws or policies governing the terms of foreign trade, and in particular, increased trade restrictions, tariffs or taxes on imports from where the products or materials are made; and potential increases to other expenditures.

In addition, the increase in interest rates has substantially increased our borrowings costs and reduced our ability to access the capital markets on favorable terms.  Additional increases in interest rates could have a significant unfavorable impact on our future results of operations and the resulting effect on the capital markets could adversely affect our ability to carry out our strategy.       

 We believe that, if and when applicable, adjusted net income and adjusted net income per diluted share (as reflected on the Supplemental Schedule), which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. In addition, we believe that, when applicable, comparing and discussing our financial results based on these measures, as calculated, is helpful to our investors since it neutralizes the effect in each year of material items that are non-recurring or non-operational in nature including items such as, but not limited to, gains or losses on transactions.

Funds from operations ("FFO") is a widely recognized measure of performance for Real Estate Investment Trusts ("REITs"). We believe that FFO and FFO per diluted share, which are non-GAAP financial measures, are helpful to our investors as measures of our operating performance. We compute FFO, as reflected on the attached Supplemental Schedules, in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we interpret the definition. FFO adjusts for the effects of certain items, such as gains or losses on transactions that occurred during the periods presented.  FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income determined in accordance with GAAP. In addition, FFO should not be used as: (i) an indication of our financial performance determined in accordance with GAAP; (ii) an alternative to cash flow from operating activities determined in accordance with GAAP; (iii) a measure of our liquidity, or; (iv) an indicator of funds available for our cash needs, including our ability to make cash distributions to shareholders. A reconciliation of our reported net income to FFO is reflected on the Supplemental Schedules included below.

To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2024. Since the items included or excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability. Since these measures, as presented, are not determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating our financial performance.

 

Universal Health Realty Income Trust Consolidated Statements of Income For the Three Months Ended March 31, 2025 and 2024 (amounts in thousands, except share information) (unaudited)
		Three Months Ended
		March 31,
		2025				2024
Revenues:
Lease revenue - UHS facilities (a.)		$	8,327			$	8,664
Lease revenue - Non-related parties			14,326				14,487
Other revenue - UHS facilities			229				220
Other revenue - Non-related parties			314				409
Interest income on financing leases - UHS facilities			1,352				1,361
			24,548				25,141
Expenses:
Depreciation and amortization			6,845				6,809
Advisory fees to UHS			1,364				1,338
Other operating expenses			7,305				7,531
			15,514				15,678
Income before equity in income of unconsolidated limited liability companies ("LLCs") and interest expense			9,034				9,463
Equity in income of unconsolidated LLCs			412				384
Interest expense, net			(4,669)				(4,547)
Net income		$	4,777			$	5,300
Basic earnings per share		$	0.35			$	0.38
Diluted earnings per share		$	0.34			$	0.38
Weighted average number of shares outstanding - Basic			13,810				13,792
Weighted average number of shares outstanding - Diluted			13,851				13,824

(a.) Includes bonus rental on McAllen Medical Center, a UHS acute care hospital facility, of $817 and $783 for the three-month periods ended March 31, 2025 and 2024, respectively.

 

Universal Health Realty Income Trust Schedule of Non-GAAP Supplemental Information ("Supplemental Schedule") For the Three Months Ended  March 31, 2025 and 2024  (amounts in thousands, except share information) (unaudited)   Calculation of Funds From Operations ("FFO")
		Three Months Ended								Three Months Ended
		March 31, 2025								March 31, 2024
		Amount				Per Diluted Share				Amount				Per Diluted Share
Net income		$	4,777			$	0.34			$	5,300			$	0.38
Plus: Depreciation and amortization expense:
Consolidated investments			6,845				0.50				6,809				0.50
Unconsolidated affiliates			308				0.02				304				0.02
FFO		$	11,930			$	0.86			$	12,413			$	0.90
Dividend paid per share						$	0.735							$	0.725

 

Universal Health Realty Income Trust Consolidated Balance Sheets (amounts in thousands, except share information) (unaudited)
		March 31,				December 31,
		2025				2024
Assets:
Real Estate Investments:
Buildings and improvements and construction in progress		$	657,156			$	655,996
Accumulated depreciation			(293,064)				(286,932)
			364,092				369,064
Land			56,870				56,870
Net Real Estate Investments			420,962				425,934
Financing receivable from UHS			82,639				82,798
Net Real Estate Investments and Financing receivable			503,601				508,732
Investments in limited liability companies ("LLCs")			14,437				13,948
Other Assets:
Cash and cash equivalents			6,974				7,097
Lease and other receivables from UHS			7,051				7,131
Lease receivable - other			8,128				7,975
Intangible assets (net of accumulated amortization of $11.7 million and    $11.3 million, respectively)			6,891				7,325
Right-of-use land assets, net			10,911				10,918
Deferred charges, notes receivable and other assets, net			15,489				17,736
Total Assets		$	573,482			$	580,862
Liabilities:
Line of credit borrowings		$	349,500			$	348,900
Mortgage notes payable, non-recourse to us, net			19,034				19,349
Accrued interest			659				694
Accrued expenses and other liabilities			9,892				10,444
Ground lease liabilities, net			10,910				10,918
Tenant reserves, deposits and deferred and prepaid rents			11,321				11,016
Total Liabilities			401,316				401,321
Equity:
Preferred shares of beneficial interest,    $.01 par value; 5,000,000 shares authorized;    none issued and outstanding			-				-
Common shares, $.01 par value;    95,000,000 shares authorized; issued and outstanding: 2025 - 13,851,469;    2024 - 13,850,608			138				138
Capital in excess of par value			271,340				271,092
Cumulative net income			850,072				845,295
Cumulative dividends			(953,576)				(943,396)
Accumulated other comprehensive income			4,192				6,412
Total Equity			172,166				179,541
Total Liabilities and Equity		$	573,482			$	580,862

 

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SOURCE Universal Health Realty Income Trust

FAQ

What was Universal Health Realty Income Trust (UHT) earnings per share in Q1 2025?

UHT reported earnings of $0.34 per diluted share in Q1 2025, compared to $0.38 per diluted share in Q1 2024, representing a decrease of $0.04 per share.

How much dividend did UHT pay in first quarter 2025?

UHT paid a dividend of $0.735 per share in Q1 2025, totaling $10.2 million, which was declared on March 11, 2025 and paid on March 31, 2025.

What caused UHT's net income decrease in Q1 2025?

UHT's net income decreased by $523,000 due to two factors: a $401,000 decrease from lower property income and a $122,000 decrease from higher interest expenses due to increased borrowings and higher borrowing rates.

What is UHT's available borrowing capacity as of March 2025?

As of March 31, 2025, UHT had $75.5 million in available borrowing capacity under its $425 million credit agreement, with $349.5 million already borrowed.

How did UHT's Funds from Operations (FFO) perform in Q1 2025?

UHT's FFO was $11.9 million ($0.86 per diluted share) in Q1 2025, down from $12.4 million ($0.90 per diluted share) in Q1 2024, a decrease of $483,000 or $0.04 per share.

How many properties does UHT own in 2025?

Universal Health Realty Income Trust has investments in 76 properties located across 21 states, including acute care hospitals, behavioral health care hospitals, specialty facilities, medical office buildings, emergency departments, and childcare centers.