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Why Is Healthpeak (PEAK) Down 12% Since Last Earnings Report?

It has been about a month since the last earnings report for Healthpeak (PEAK). Shares have lost about 12% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Healthpeak due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Healthpeak’s FFO and Revenues Surpass Estimates in Q4

Healthpeak reported fourth-quarter 2022 FFO as adjusted per share of 44 cents, beating the Zacks Consensus Estimate by a penny. The reported figure was up 7.3% from the year-ago quarter’s 41 cents.

The performance was backed by healthy top-line growth. Improvement in same-store portfolio cash (adjusted) NOI was witnessed across the portfolio. The company issued its 2023 outlook.

The healthcare REIT generated revenues of $524.5 million, outpacing the Zacks Consensus Estimate of $519.9 million. The figure was 8.5% higher than the prior-year quarter’s $483.2 million.

In 2022, FFO, as adjusted, was $1.74 per share, in line with the Zacks Consensus Estimate. The reported figure improved 8.1% year over year. Full-year revenues of $2.06 billion surpassed the Zacks Consensus Estimate of $2.05 billion. Moreover, the figure increased 8.7% from the previous year.

Behind the Headlines

In the fourth quarter, Healthpeak reported 6.6% year-over-year growth in the same-store portfolio cash-adjusted NOI.

It witnessed 5.7% and 5.4% year-over-year growth in the same-store portfolio cash (adjusted) NOI for its life-science and medical office segments, respectively. Also, the same-store portfolio cash-adjusted NOI for the CCRC portfolio improved 15% from the prior-year quarter.

Portfolio Activity

During the reported quarter, Healthpeak executed life science new and renewal leases totaling 175,000 square feet with cash-releasing spreads on renewals of +64%.

The company placed in service 142,000 square feet of fully leased Class A development space at 101 Cambridge Park Drive in Cambridge, MA. This represented an investment of $145 million. The remaining 19,000 square feet are expected to be placed in service during 2023.

PEAK also completed the redevelopment of the fully leased 1150 Veterans building on the Oyster Point campus in South San Francisco for $44 million.

Balance Sheet

Healthpeak exited fourth-quarter 2022 with cash and cash equivalents of $72 million, down from $112.5 million as of Sep 30, 2022. Its net debt to adjusted EBITDAre was 5.3X as of Dec 31, 2022.

In December, PEAK settled all 9.1 million shares previously outstanding under the ATM forward contracts at a weighted average net price of $34 per share. This resulted in net proceeds of $308 million.

2023 Outlook

Healthpeak issued its guidance for 2023.

It expects FFO as adjusted per share to lie between $1.70 and $1.76.

The total portfolio same-store cash-adjusted NOI growth is estimated to lie in the range of 2.75-4.25%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Healthpeak has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Healthpeak has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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