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UHT Stock Gains Following Earnings Rise in Q4, FFO Improves Y/Y
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Shares of Universal Health Realty Income Trust (UHT - Free Report) have gained 0.9% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 1.7% loss over the same time frame. Over the past month, the stock gained 3.9% versus the S&P 500’s 3.4% decline.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Performance
Universal Health Realty reported net income of $4.7 million, or $0.34 per diluted share, for the fourth quarter of 2024, up 29.7% from $3.6 million, or $0.26 per diluted share, in the prior-year quarter. Adjusted net income, which excludes the prior-year’s loss on divestiture, increased $836,000, or $0.06 per diluted share. This improvement was driven by a $1.2 million increase in income generated at various properties, partially offset by a $337,000 increase in interest expense.
For 2024, net income rose 24.9% to $19.2 million, or $1.39 per diluted share, compared with $15.4 million, or $1.11 per diluted share, in 2023. Adjusted net income grew $3.6 million, or $0.26 per diluted share, supported by a $3.5 million net income gain from properties and a $2.0 million reduction in expenses related to a property in Chicago, IL. These gains were partially offset by a $1.9 million increase in interest expense.
Funds from operations (FFO), a key metric for real estate investment trusts, rose 3.3% to $11.8 million, or $0.85 per diluted share, in fourth-quarter 2024 compared with $11.4 million, or $0.82 per diluted share, a year earlier. For the full year, FFO grew 7.4% to $47.9 million, or $3.46 per diluted share, from $44.6 million, or $3.23 per diluted share, in 2023.
Universal Health Realty Income Trust Price, Consensus and EPS Surprise
Lease revenue from Universal Health Services (UHS) facilities remained relatively stable at $8.3 million in fourth-quarter 2024 compared with $8.3 million in the prior-year period. Meanwhile, lease revenue from non-related parties increased 3.1% to $14.5 million from $14 million.
Lease revenue from UHS facilities increased 3.1% to $33.6 million in 2024 compared with $32.6 million in the prior-year period. Meanwhile, lease revenue from non-related parties increased 4.8% to $57.7 million from $54.9 million.
Interest income from financing leases associated with UHS facilities was $1.355 million for the quarter, down 0.5% from $1.362 million a year earlier. For the full year, the metric was $5.4 million, down 0.5% from $5.5 million in the comparable 2023 period.
Operating expenses totaled $15.4 million in fourth-quarter 2024, down 4.8% from $16.2 million in the same period of 2023, aided by a reduction in depreciation and amortization. For the full year, the metric was $62.2 million, down 3.1% from $64.2 million in the comparable 2023 period.
Management Commentary
The company attributed its earnings growth to increased income from various properties and lower property-related expenses, particularly in Chicago, IL, where demolition costs in 2023 had weighed on results.
To strengthen liquidity, UHT amended its credit agreement in September 2024, increasing its borrowing capacity to $425 million (up from $375 million) and extending the maturity date to Sept. 30, 2028. At year-end, the company had $348.9 million in outstanding borrowings and $76.1 million in available borrowing capacity.
Factors Influencing Earnings
The increase in earnings was primarily attributed to income growth across multiple properties. However, this was partially offset by rising interest expenses due to higher average borrowing rates and increased outstanding debt under the company’s revolving credit agreement.
In an effort to mitigate interest rate exposure, Universal Health Realty entered into a new interest rate swap agreement in October 2024, locking in a 3.2725% fixed rate on $85 million of debt through September 2028. This replaced two expired swaps that had a lower combined rate of 1.21%.
Guidance
Management did not provide specific financial guidance for 2025 but indicated that macroeconomic conditions, particularly interest rates and property-related expenses, will continue to shape performance.
Other Developments
The company completed the construction of Sierra Medical Plaza I in Reno, NV, in March 2023. The property, located on the campus of a UHS-owned hospital, is currently 68% leased, including a 10-year master flex lease covering 34% of rentable space.
Additionally, Universal Health Realty sold a vacant specialty facility in Corpus Christi, TX, in December 2023 for $3.9 million, recording a $232,000 loss on divestiture. The company is still marketing vacant properties in Chicago, IL, and Evansville, IN.
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UHT Stock Gains Following Earnings Rise in Q4, FFO Improves Y/Y
Shares of Universal Health Realty Income Trust (UHT - Free Report) have gained 0.9% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 Index’s 1.7% loss over the same time frame. Over the past month, the stock gained 3.9% versus the S&P 500’s 3.4% decline.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Performance
Universal Health Realty reported net income of $4.7 million, or $0.34 per diluted share, for the fourth quarter of 2024, up 29.7% from $3.6 million, or $0.26 per diluted share, in the prior-year quarter. Adjusted net income, which excludes the prior-year’s loss on divestiture, increased $836,000, or $0.06 per diluted share. This improvement was driven by a $1.2 million increase in income generated at various properties, partially offset by a $337,000 increase in interest expense.
For 2024, net income rose 24.9% to $19.2 million, or $1.39 per diluted share, compared with $15.4 million, or $1.11 per diluted share, in 2023. Adjusted net income grew $3.6 million, or $0.26 per diluted share, supported by a $3.5 million net income gain from properties and a $2.0 million reduction in expenses related to a property in Chicago, IL. These gains were partially offset by a $1.9 million increase in interest expense.
Funds from operations (FFO), a key metric for real estate investment trusts, rose 3.3% to $11.8 million, or $0.85 per diluted share, in fourth-quarter 2024 compared with $11.4 million, or $0.82 per diluted share, a year earlier. For the full year, FFO grew 7.4% to $47.9 million, or $3.46 per diluted share, from $44.6 million, or $3.23 per diluted share, in 2023.
Universal Health Realty Income Trust Price, Consensus and EPS Surprise
Universal Health Realty Income Trust price-consensus-eps-surprise-chart | Universal Health Realty Income Trust Quote
Key Business Metrics
Lease revenue from Universal Health Services (UHS) facilities remained relatively stable at $8.3 million in fourth-quarter 2024 compared with $8.3 million in the prior-year period. Meanwhile, lease revenue from non-related parties increased 3.1% to $14.5 million from $14 million.
Lease revenue from UHS facilities increased 3.1% to $33.6 million in 2024 compared with $32.6 million in the prior-year period. Meanwhile, lease revenue from non-related parties increased 4.8% to $57.7 million from $54.9 million.
Interest income from financing leases associated with UHS facilities was $1.355 million for the quarter, down 0.5% from $1.362 million a year earlier. For the full year, the metric was $5.4 million, down 0.5% from $5.5 million in the comparable 2023 period.
Operating expenses totaled $15.4 million in fourth-quarter 2024, down 4.8% from $16.2 million in the same period of 2023, aided by a reduction in depreciation and amortization. For the full year, the metric was $62.2 million, down 3.1% from $64.2 million in the comparable 2023 period.
Management Commentary
The company attributed its earnings growth to increased income from various properties and lower property-related expenses, particularly in Chicago, IL, where demolition costs in 2023 had weighed on results.
To strengthen liquidity, UHT amended its credit agreement in September 2024, increasing its borrowing capacity to $425 million (up from $375 million) and extending the maturity date to Sept. 30, 2028. At year-end, the company had $348.9 million in outstanding borrowings and $76.1 million in available borrowing capacity.
Factors Influencing Earnings
The increase in earnings was primarily attributed to income growth across multiple properties. However, this was partially offset by rising interest expenses due to higher average borrowing rates and increased outstanding debt under the company’s revolving credit agreement.
In an effort to mitigate interest rate exposure, Universal Health Realty entered into a new interest rate swap agreement in October 2024, locking in a 3.2725% fixed rate on $85 million of debt through September 2028. This replaced two expired swaps that had a lower combined rate of 1.21%.
Guidance
Management did not provide specific financial guidance for 2025 but indicated that macroeconomic conditions, particularly interest rates and property-related expenses, will continue to shape performance.
Other Developments
The company completed the construction of Sierra Medical Plaza I in Reno, NV, in March 2023. The property, located on the campus of a UHS-owned hospital, is currently 68% leased, including a 10-year master flex lease covering 34% of rentable space.
Additionally, Universal Health Realty sold a vacant specialty facility in Corpus Christi, TX, in December 2023 for $3.9 million, recording a $232,000 loss on divestiture. The company is still marketing vacant properties in Chicago, IL, and Evansville, IN.