Yahoo Finance Universal Health Realty Income Trust Reports Notable Increase in Q1 2024 Earnings
Net Income: $5.3M for Q1 2024, up from $4.5M in Q1 2023, an increase of 17.8% year-over-year.
Earnings Per Share (EPS): Increased to $0.38 in Q1 2024 from $0.32 in Q1 2023.
Funds from Operations (FFO): Rose to $12.4M, or $0.90 per diluted share in Q1 2024, compared to $11.4M, or $0.82 per diluted share in Q1 2023.
Dividend: Paid a quarterly dividend of $0.725 per share, totaling $10.0M, on March 29, 2024.
Interest Expense: Increased to $4.547M in Q1 2024 from $3.697M in Q1 2023, reflecting higher average borrowing rates and outstanding borrowings.
Available Borrowing Capacity: As of March 31, 2024, available borrowing capacity stood at $41.3M, with $333.7M in outstanding borrowings under a $375M credit facility.
Construction Update: Completed construction of Sierra Medical Plaza I in Reno, Nevada with an estimated cost of $35M and $29M incurred as of March 31, 2024.
On April 24, 2024, Universal Health Realty Income Trust (NYSE:UHT) disclosed its financial results for the first quarter of 2024, revealing a substantial improvement in net income and funds from operations (FFO). The details of these results can be found in their recent 8-K filing.
Company Overview
Universal Health Realty Income Trust is a healthcare real estate investment trust (REIT) engaged in the investment and leasing of healthcare and human service facilities. The company manages a diverse portfolio that includes acute care hospitals, medical office buildings, and childcare centers across the United States. This strategic focus on healthcare facilities allows UHT to generate stable revenue and net income from its investments.
Financial Performance Highlights
For the quarter ended March 31, 2024, UHT reported a net income of $5.3 million, or $0.38 per diluted share, an increase from $4.5 million, or $0.32 per diluted share, in the first quarter of 2023. This improvement in net income, amounting to $841,000 or $0.06 per diluted share, was primarily driven by a net increase in income generated from various properties and a reduction in building expenses related to vacant facilities. However, these gains were partially offset by a significant increase in interest expense due to higher average borrowing rates and outstanding borrowings.
The company also reported an increase in FFO, a critical measure for REITs, which rose to $12.4 million, or $0.90 per diluted share, up from $11.4 million, or $0.82 per diluted share in the prior-year quarter. The increase in FFO is attributed to the rise in net income and an increase in depreciation and amortization expenses.
Operational and Strategic Developments
During the quarter, UHT continued to enhance its property portfolio. Notably, the construction of Sierra Medical Plaza I in Reno, Nevada was completed in March 2023. This medical office building (MOB), located on the campus of the Northern Nevada Sierra Medical Center, is significant as it reflects UHT's strategic expansion into high-demand healthcare infrastructure.
Additionally, UHT managed the demolition of a specialty hospital in Chicago and sold a vacant specialty facility in Corpus Christi, Texas, as part of its portfolio optimization strategy. These actions are part of UHT's ongoing efforts to enhance the value of its real estate assets and reduce operating expenses associated with non-performing properties.
Dividend and Capital Resources
The Trust declared a first-quarter dividend of $0.725 per share, totaling $10.0 million, paid on March 29, 2024. As of March 31, 2024, UHT reported $333.7 million in borrowings under its $375 million revolving credit facility, with an available borrowing capacity of $41.3 million.
Challenges and Outlook
Despite the positive earnings report, UHT faces challenges, including increased borrowing costs which have impacted its financial flexibility. The rising interest rates pose a significant challenge, potentially affecting future profitability and capital market activities. Moreover, the healthcare sector continues to experience operational pressures such as staffing shortages and regulatory changes, which could influence tenant operations and, by extension, UHT's lease revenues.
In conclusion, while Universal Health Realty Income Trust has demonstrated a robust performance in the first quarter of 2024, it must navigate interest rate volatility and sector-specific challenges to sustain its growth trajectory. Investors and stakeholders will likely watch how the Trust manages these challenges while striving to maximize shareholder value through strategic asset management and capital allocation.
Explore the complete 8-K earnings release (here) from Universal Health Realty Income Trust for further details.
This article first appeared on GuruFocus.
