Consolidated Results of Operations - Three-Month Periods
Ended June 30, 2022 and 2021:
KING OF
PRUSSIA, Pa., July 25,
2022 /PRNewswire/ -- Universal Health Realty Income
Trust (NYSE:UHT) announced today that for the three-month period
ended June 30, 2022, net income was $5.2 million, or $.38 per diluted share, as compared to
$6.6 million, or $.48 per diluted share, during the second quarter
of 2021.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO"), were $12.2 million, or
$.88 per diluted share, during the
second quarter of 2022, as compared to $12.6
million, or $.92 per diluted
share, during the second quarter of 2021.
Our financial results for the three-month period ended
June 30, 2021 included a gain of
$1.3 million, or $.09 per diluted share, related to the sale of
certain real estate assets. After adjusting the reported net income
for the three-month period ended June 30,
2021 for the $1.3 million
gain, as computed on the Supplemental Schedule, our adjusted net
income was $5.3 million, or
$.39 per diluted share, during the
second quarter of 2021.
The decrease in our adjusted net income of $99,000, or $.01
per diluted share, during the second quarter of 2022, as compared
to the second quarter of 2021, was due primarily to: (i) a decrease
of $737,000, or $.05 per diluted share, related to a vacant
specialty hospital located in Chicago,
Illinois, on which, as discussed below, the lease expired on
December 31, 2021; (ii) a decrease of
$184,000, or $.01 per diluted share, resulting from an
increase in interest expense primarily due to increased borrowings
and an increase in our borrowing rate; partially offset by; (iii) a
net increase of $341,000, or
$.02 per diluted share, resulting
from the asset purchase and sale agreement with Universal Health
Services, Inc. ("UHS") that occurred on December 31, 2021; (iv) an increase of
$335,000, or $.02 per diluted share, resulting from the impact
of the fair market value lease renewal on Wellington Regional
Medical Center, which became effective on January 1, 2022, and; (v) an increase of
$146,000, or $.01 per diluted share, resulting from an
aggregate net increase in the income generated at various
properties.
During the second quarter of 2022, as compared to the second
quarter of 2021, our FFO decreased $450,000, or $.04
per diluted share. The decrease was due to the above-mentioned
$99,000, or $.01 per diluted share, decrease in adjusted net
income experienced during the second quarter of 2022, as compared
to the second quarter of 2021, as well as a $351,000 decrease in depreciation and
amortization expense incurred on our consolidated and
unconsolidated investments.
Consolidated Results of Operations - Six-Month Periods Ended
June 30, 2022 and 2021:
For the six-month period ended June 30,
2022, net income was $10.6
million, or $0.77 per diluted
share, as compared to $12.2 million,
or $.89 per diluted share during the
first six months of 2021.
As calculated on the Supplemental Schedule, our FFO were
$24.6 million, or $1.78 per diluted share, during the first six
months of 2022, as compared to $25.4
million, or $1.84 per diluted
share, during the first six months of 2021.
After adjusting the reported results for the six-month period
ended June 30, 2021 for the
above-mentioned $1.3 million gain
recorded during the second quarter of 2021, as computed on the
Supplemental Schedule, our adjusted net income was $10.9 million, or $.79 per diluted share during the first six
months of 2021.
The decrease in our adjusted net income of $280,000, or $.02
per diluted share, during the first six months of 2022, as compared
to the comparable period of 2021, was primarily due to: (i) a
decrease of $1.6 million, or
$.12 per diluted share, related to a
vacant specialty hospital located in Chicago, Illinois, on which, as discussed
below, the lease expired on December 31,
2021; (ii) a decrease of $273,000, or $.02
per diluted share, resulting from an increase in interest expense
primarily due to increased borrowings and an increase in our
borrowing rate; partially offset by; (iii) a net increase of
$666,000, or $.05 per diluted share, resulting from the asset
purchase and sale agreement with UHS that occurred on December 31, 2021; (iv) an increase of
$670,000, or $.05 per diluted share, resulting from the impact
of the fair market value lease renewal on Wellington Regional
Medical Center, which became effective on January 1, 2022, and; (v) an increase of
$278,000, or $.02 per diluted share, resulting from an
aggregate net increase in the income generated at various
properties.
During the first six months of 2022, as compared to the
comparable period of 2021, our FFO decreased $776,000, or $.06
per diluted share. The decrease was due to the above-mentioned
$280,000, or $.02 per diluted share, decrease in adjusted net
income experienced during the first six months of 2022, as compared
to the first six months of 2021, as well as a $496,000 decrease in depreciation and
amortization expense incurred on our consolidated and
unconsolidated investments.
Dividend Information:
The second quarter dividend of $.71 per share, or $9.8
million in the aggregate, was declared on June 8, 2022 and paid on June 30, 2022.
Capital Resources Information:
At June 30, 2022 we had
$284.3 million of borrowings
outstanding pursuant to the terms of our $375 million revolving credit agreement and
$87.5 million of available borrowing
capacity as of that date, net of outstanding borrowings and letters
of credit.
Vacant Specialty Facilities:
As previously disclosed, the lease on the specialty hospital
located in Chicago, Illinois,
expired on December 31, 2021 and the
facility is currently vacant. During the three and six-months
ended June 30, 2021, we earned
$390,000 and $780,000, respectively, of lease revenue in
connection with this property. The operating expenses incurred by
us in connection with this facility during the three and six-months
ended June 30, 2022 were $347,000 and $840,000, respectively. Prior to 2022, the former
tenant was responsible for the operating expenses on this facility.
Pursuant to the terms of the lease that expired in December, 2021,
we earned approximately $1.6 million
of lease revenue during the 2021 full year.
We estimate that the aggregate operating expenses for the three
vacant specialty facilities, including the facility located in
Chicago, Illinois, as well as
facilities located in Evansville,
Indiana, and Corpus Christi,
Texas (which have been vacant since 2019), will approximate
$1.3 million during the remaining six
months of 2022. Future operating expenses related to these
facilities will be incurred by us during the time they remain owned
and vacant. We continue to market these specialty facilities
to potential interested parties. However, should these properties
continue to remain vacant for an extended period of time, or should
we incur substantial renovation costs to make the properties
suitable for other operators/tenants, our future results of
operations could be materially unfavorably impacted.
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 or
commitments 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, those related to the potential impact of
COVID-19 on our financial results, 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, 2021 and in Item
7-Forward-Looking Statements and Certain Risk Factors in our
Form 10-Q for the quarter ended March 31,
2022), 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, including the impact of
the COVID-19 pandemic. Future operations and financial results of
our tenants, and in turn ours, could be materially impacted by
various developments including those related to COVID-19. Such
developments include, but are not limited to, decreases in staffing
availability and related increases to wage expense experienced by
our tenants resulting from the nationwide shortage of nurses and
other clinical staff and support personnel, the impact of
government and administrative regulation and stimulus on 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 disruptions
related to supplies required for our tenants' employees and
patients; and potential increases to other expenditures. Due to
COVID-19 restrictions and its impact on the economy, we may
experience a decrease in prospective tenants which could
unfavorably impact the volume of new leases, as well as the renewal
rate of existing leases. The COVID-19 pandemic may delay our
construction projects which could result in increased costs and
delay the timing of opening and rental payments from those
projects, although no such delays have yet occurred. The COVID-19
pandemic could also impact our indebtedness and the ability to
refinance such indebtedness on acceptable terms, as well as risks
associated with disruptions in the financial markets and the
business of financial institutions as the result of the COVID-19
pandemic, which could impact us from a financing perspective; and
changes in general economic conditions nationally and regionally in
the markets where our properties are located resulting from the
COVID-19 pandemic. We are not able to quantify the impact that
these factors will have on our future operations, but developments
related to the COVID-19 pandemic could have a material adverse
impact on our future financial results.
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 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 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, 2021 and our Report on Form 10-Q for the quarter
ended March 31, 2022. 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 and Six
Months Ended June 30, 2022 and 2021
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
7,394
|
|
|
$
|
7,265
|
|
|
$
|
14,820
|
|
|
$
|
14,397
|
|
Lease revenue -
Non-related parties
|
|
|
12,933
|
|
|
|
13,117
|
|
|
|
25,828
|
|
|
|
26,209
|
|
Other revenue -
UHS facilities
|
|
|
233
|
|
|
|
207
|
|
|
|
462
|
|
|
|
433
|
|
Other revenue -
Non-related parties
|
|
|
242
|
|
|
|
287
|
|
|
|
497
|
|
|
|
536
|
|
Interest income
on financing leases - UHS facilities
|
|
|
1,369
|
|
|
|
-
|
|
|
|
2,739
|
|
|
|
-
|
|
|
|
|
22,171
|
|
|
|
20,876
|
|
|
|
44,346
|
|
|
|
41,575
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,679
|
|
|
|
6,951
|
|
|
|
13,388
|
|
|
|
13,738
|
|
Advisory fees
to UHS
|
|
|
1,266
|
|
|
|
1,089
|
|
|
|
2,490
|
|
|
|
2,151
|
|
Other operating
expenses
|
|
|
6,986
|
|
|
|
5,903
|
|
|
|
13,853
|
|
|
|
11,505
|
|
|
|
|
14,931
|
|
|
|
13,943
|
|
|
|
29,731
|
|
|
|
27,394
|
|
Income before equity in
income of unconsolidated limited
liability companies ("LLCs"), gain on sale and interest
expense
|
|
|
7,240
|
|
|
|
6,933
|
|
|
|
14,615
|
|
|
|
14,181
|
|
Equity in
income of unconsolidated LLCs
|
|
|
345
|
|
|
|
567
|
|
|
|
597
|
|
|
|
1,038
|
|
Gain on sale of real
estate assets
|
|
|
-
|
|
|
|
1,304
|
|
|
|
-
|
|
|
|
1,304
|
|
Interest expense,
net
|
|
|
(2,367)
|
|
|
|
(2,183)
|
|
|
|
(4,589)
|
|
|
|
(4,316)
|
|
Net income
|
|
$
|
5,218
|
|
|
$
|
6,621
|
|
|
$
|
10,623
|
|
|
$
|
12,207
|
|
Basic earnings per
share
|
|
$
|
0.38
|
|
|
$
|
0.48
|
|
|
$
|
0.77
|
|
|
$
|
0.89
|
|
Diluted earnings per
share
|
|
$
|
0.38
|
|
|
$
|
0.48
|
|
|
$
|
0.77
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares outstanding - Basic
|
|
|
13,768
|
|
|
|
13,753
|
|
|
|
13,766
|
|
|
|
13,751
|
|
Weighted average number
of shares outstanding - Diluted
|
|
|
13,789
|
|
|
|
13,776
|
|
|
|
13,788
|
|
|
|
13,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a.) Includes bonus
rental on McAllen Medical Center, a UHS acute care hospital
facility of $643 and $1,321 for the three and six-month periods
ended June 30, 2022, respectively, and includes bonus rental on
three UHS acute care hospital facilities of $1,648 and $3,343 for
the three and six-month periods ended June 30, 2021,
respectively.
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Three Months
Ended June 30, 2022 and 2021
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
5,218
|
|
|
$
|
0.38
|
|
|
$
|
6,621
|
|
|
$
|
0.48
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on
sale of real estate assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,304)
|
|
|
|
(0.09)
|
|
Subtotal adjustments to
net income
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,304)
|
|
|
|
(0.09)
|
|
Adjusted net
income
|
|
$
|
5,218
|
|
|
$
|
0.38
|
|
|
$
|
5,317
|
|
|
$
|
0.39
|
|
Calculation of Funds
From Operations ("FFO")
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
5,218
|
|
|
$
|
0.38
|
|
|
$
|
6,621
|
|
|
$
|
0.48
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
6,679
|
|
|
|
0.48
|
|
|
|
6,951
|
|
|
|
0.50
|
|
Unconsolidated
affiliates
|
|
|
295
|
|
|
|
0.02
|
|
|
|
374
|
|
|
|
0.03
|
|
Less: Gain on sale of
real estate assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,304)
|
|
|
|
(0.09)
|
|
FFO
|
|
$
|
12,192
|
|
|
$
|
0.88
|
|
|
$
|
12,642
|
|
|
$
|
0.92
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
0.710
|
|
|
|
|
|
|
$
|
0.700
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Six Months
Ended June 30, 2022 and 2021
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
10,623
|
|
|
$
|
0.77
|
|
|
$
|
12,207
|
|
|
$
|
0.89
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Gain on sale of
real estate assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,304)
|
|
|
|
(0.10)
|
|
Subtotal adjustments to
net income
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,304)
|
|
|
|
(0.10)
|
|
Adjusted net
income
|
|
$
|
10,623
|
|
|
$
|
0.77
|
|
|
$
|
10,903
|
|
|
$
|
0.79
|
|
Calculation of Funds
From Operations ("FFO")
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
2022
|
|
|
June 30,
2021
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
10,623
|
|
|
$
|
0.77
|
|
|
$
|
12,207
|
|
|
$
|
0.89
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
13,388
|
|
|
|
0.97
|
|
|
|
13,738
|
|
|
|
1.00
|
|
Unconsolidated
affiliates
|
|
|
590
|
|
|
|
0.04
|
|
|
|
736
|
|
|
|
0.05
|
|
Less: Gain on sale of
real estate assets
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,304)
|
|
|
|
(0.10)
|
|
FFO
|
|
$
|
24,601
|
|
|
$
|
1.78
|
|
|
$
|
25,377
|
|
|
$
|
1.84
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
1.415
|
|
|
|
|
|
|
$
|
1.395
|
|
Universal Health
Realty Income Trust
|
Consolidated Balance
Sheets
|
(amounts in thousands,
except share information)
|
(unaudited)
|
|
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
Assets:
|
|
|
|
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
|
|
|
|
Buildings and
improvements and construction in progress
|
|
$
|
630,220
|
|
|
$
|
608,836
|
|
Accumulated
depreciation
|
|
|
(237,268)
|
|
|
|
(225,584)
|
|
|
|
|
392,952
|
|
|
|
383,252
|
|
Land
|
|
|
56,631
|
|
|
|
54,897
|
|
Net Real Estate Investments
|
|
|
449,583
|
|
|
|
438,149
|
|
Financing receivable
from UHS
|
|
|
83,697
|
|
|
|
82,439
|
|
Net Real Estate Investments and Financing receivable
|
|
|
533,280
|
|
|
|
520,588
|
|
Investments in and
advances to limited liability companies ("LLCs")
|
|
|
9,713
|
|
|
|
10,139
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
8,399
|
|
|
|
22,504
|
|
Lease and other
receivables from UHS
|
|
|
4,696
|
|
|
|
4,641
|
|
Lease receivable -
other
|
|
|
7,767
|
|
|
|
7,109
|
|
Intangible assets (net
of accumulated amortization of $14.3 million and
$14.2
million, respectively)
|
|
|
10,548
|
|
|
|
9,972
|
|
Right-of-use land
assets, net
|
|
|
11,476
|
|
|
|
11,495
|
|
Deferred charges and
other assets, net
|
|
|
17,934
|
|
|
|
11,971
|
|
Total Assets
|
|
$
|
603,813
|
|
|
$
|
598,419
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Line of credit
borrowings
|
|
$
|
284,300
|
|
|
$
|
271,900
|
|
Mortgage notes
payable, non-recourse to us, net
|
|
|
50,729
|
|
|
|
56,866
|
|
Accrued
interest
|
|
|
323
|
|
|
|
346
|
|
Accrued expenses and
other liabilities
|
|
|
12,286
|
|
|
|
12,157
|
|
Ground lease
liabilities, net
|
|
|
11,476
|
|
|
|
11,495
|
|
Tenant reserves,
deposits and deferred and prepaid rents
|
|
|
10,053
|
|
|
|
10,328
|
|
Total Liabilities
|
|
|
369,167
|
|
|
|
363,092
|
|
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: 2022 -
13,800,694;
2021 -
13,783,442
|
|
|
138
|
|
|
|
138
|
|
Capital in excess of
par value
|
|
|
269,039
|
|
|
|
268,515
|
|
Cumulative net
income
|
|
|
800,182
|
|
|
|
789,559
|
|
Cumulative
dividends
|
|
|
(843,515)
|
|
|
|
(823,998)
|
|
Accumulated other
comprehensive income
|
|
|
8,802
|
|
|
|
1,113
|
|
Total Equity
|
|
|
234,646
|
|
|
|
235,327
|
|
Total Liabilities and Equity
|
|
$
|
603,813
|
|
|
$
|
598,419
|
|
View original
content:https://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2022-second-quarter-financial-results-301592727.html
SOURCE Universal Health Realty Income Trust