KING OF PRUSSIA, Pa.,
July 26, 2019 /PRNewswire/
-- Universal Health Realty Income Trust (NYSE: UHT) announced
today that for the three-month period ended June 30, 2019,
reported net income was $4.3 million,
or $.31 per diluted share, as
compared to $5.8 million, or
$.42 per diluted share, during the
second quarter of 2018.
As calculated on the attached Schedule of Non-GAAP Supplemental
Information ("Supplemental Schedule"), our funds from operations
("FFO"), were $11.0 million, or
$.80 per diluted share, during the
second quarter of 2019, as compared to $12.0
million, or $.88 per diluted
share during the second quarter of 2018.
Our net income, adjusted net income and FFO for the three-month
period ended June 30, 2018 included a
net favorable impact of approximately $1.3
million, or $.10 per diluted
share, consisting of the following: (i) a favorable impact of
approximately $1.7 million, or
$.12 per diluted share, received in
connection with a lease termination agreement entered into during
the second quarter of 2018 on a single-tenant medical office
building located in Texas (the
building has approximately 20,500 rentable square feet and this
agreement terminated a lease that was scheduled to expire in July,
2020), partially offset by; (ii) an unfavorable impact of
approximately $400,000, or
$.02 per diluted share, consisting of
non-recurring repairs and remediation expenses incurred at one of
our medical office buildings. Also included in our net income and
adjusted net income during the second quarter of 2018 was a
favorable impact of $194,000, or
$.01 per diluted share, of business
interruption insurance recoveries recorded in connection with
damage sustained from Hurricane Harvey which occurred in late
August, 2017.
Consolidated Results of Operations - Six-Month Periods Ended
June 30, 2019 and 2018:
For the six-month period ended June 30,
2019, our reported net income was $8.5 million, or $.62 per diluted share, as compared to
$15.4 million, or $1.12 per diluted share during the first six
months of 2018.
As reflected on the attached Supplemental Schedule, our
financial results for the six-month period ended June 30, 2019 included a gain of $250,000, or $.02
per diluted share, related to the sale of a parcel of land located
at one of our buildings. Our financial results for the six-month
period ended June 30, 2018 included
$4.5 million, or $.33 per diluted share, of hurricane insurance
recoveries in excess of damaged property write-downs received in
connection with damage sustained from Hurricane Harvey which
occurred in August, 2017. Excluding the impact of these items from
each respective six-month period, and as calculated on the
Supplemental Schedule, our adjusted net income was $8.2 million, or $.60 per diluted share during the six-month
period ended June 30, 2019, as
compared to $10.9 million, or
$.79 per diluted share during the
six-month period ended June 30,
2018.
As also calculated on the Supplemental Schedule, our FFO were
$21.9 million, or $1.60 per diluted share, during the first six
months of 2019, as compared to $23.5
million, or $1.71 per diluted
share, during the first six months of 2018.
Our net income and adjusted net income for the six months ended
June 30, 2019 was unfavorably
impacted by $355,000, or $.03 per diluted share, resulting from net asset
write offs recorded in connection with early lease terminations or
relocations that occurred during the first quarter of 2019 at three
of our multi-tenant medical office buildings. As discussed above,
our net income, adjusted net income and FFO for the six months
ended June 30, 2018 included a net
favorable impact of approximately $1.3
million, or $.10 per diluted
share, related to the favorable impact from a lease termination
agreement entered into during the second quarter of 2018
($1.7 million, or $.12 per diluted share) partially offset by the
unfavorable impact of the non-recurring repairs and remediation
expenses incurred at one of our medical office buildings
($400,000, or $.02 per diluted share). In addition, our net
income, adjusted net income and FFO during the six months ended
June 30, 2018 included the favorable
impact of approximately $1.2 million,
or $.08 per diluted share, resulting from business
interruption insurance recovery proceeds recorded during the
six-month period ended June 30,
2018. Included in this amount, which covered the period of
late August, 2017 through June 30,
2018 (after satisfaction of the applicable deductibles), was
approximately $500,000, or
$.04 per diluted share, related to
the period of August, 2017 through December
31, 2017.
Dividend Information:
The second quarter dividend of $.68 per share, or $9.4
million in the aggregate, was declared on June 12, 2019 and paid on July 2, 2019.
Capital Resources Information:
At June 30, 2019, we had
$191.6 million of borrowings
outstanding pursuant to the terms of our $300 million credit agreement and $108.4 million of available borrowing capacity.
The credit agreement has a scheduled maturity date of March, 2022,
however, we have the option to extend the maturity date for up to
two additional six-month periods.
Adoption of ASU 2016-02, "Leases (Topic 842): Amendments to
the FASB Accounting Standards Codification":
Effective January 1, 2019, we
adopted ASU 2016-02 which requires lessees to, among other things,
recognize right-of-use assets and lease liabilities on the balance
sheet. As a result of our adoption of ASU 2016-02, in connection
with ground leases where we are the lessee, our consolidated
balance sheet as of June 30, 2019
includes right-of-use land assets ($8.9
million) and ground lease liabilities ($8.9 million). Prior period financial
statement amounts were not adjusted for the effects of this new
standard.
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, rehabilitation hospitals, sub-acute
care facilities, medical/office buildings, free-standing emergency
departments and childcare centers. We have investments in
sixty-nine properties located in twenty states.
This press release contains forward-looking statements based on
current management expectations. Numerous factors, including those
disclosed herein, those related to healthcare and healthcare real
estate 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 and Risk Factors
in our Form 10-K for the year ended
December 31, 2018 and in Item 7 – Forward-Looking
Statements and Certain Risk Factors in our Form 10-Q for the
quarterly period ended March 31,
2019), may cause the results to differ materially from those
anticipated in the forward-looking statements. Many of the factors
that will determine our future results are beyond our capability to
control or predict. These statements are subject to risks and
uncertainties and therefore actual results may differ materially.
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.
We believe that adjusted net income and adjusted net income per
diluted share (as reflected on the attached Supplemental
Schedules), 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 and hurricane proceeds in excess of
damaged property write-downs.
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
gains, such as gains on transactions and hurricane recovery
proceeds in excess of damaged property write-downs during the
periods presented. To the extent a REIT recognizes a gain or
loss with respect to the sale of incidental assets, such as the
sale of land peripheral to operating properties, the REIT has the
option to exclude or include such gains and losses in the
calculation of FFO. We have opted to exclude gains and losses
from sales of incidental assets in our calculation of FFO.
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, 2018 and our report on Form 10-Q for the
quarterly period ended March 31,
2019. 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, 2019 and 2018
|
(amounts in
thousands, except per share amounts)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease revenue -
UHS facilities (a.)
|
|
$
|
5,651
|
|
|
$
|
5,619
|
|
|
$
|
11,444
|
|
|
$
|
11,354
|
|
Lease revenue-
Non-related parties
|
|
|
13,178
|
|
|
|
12,392
|
|
|
|
25,909
|
|
|
|
24,899
|
|
Other revenue -
UHS facilities
|
|
|
209
|
|
|
|
75
|
|
|
|
422
|
|
|
|
137
|
|
Other revenue -
Non-related parties
|
|
|
288
|
|
|
|
2,025
|
|
|
|
663
|
|
|
|
2,260
|
|
|
|
|
19,326
|
|
|
|
20,111
|
|
|
$
|
38,438
|
|
|
$
|
38,650
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
6,426
|
|
|
|
6,111
|
|
|
|
13,134
|
|
|
|
12,398
|
|
Advisory fees
to UHS
|
|
|
982
|
|
|
|
948
|
|
|
|
1,952
|
|
|
|
1,852
|
|
Other operating
expenses
|
|
|
5,330
|
|
|
|
5,445
|
|
|
|
10,540
|
|
|
|
10,653
|
|
|
|
|
12,738
|
|
|
|
12,504
|
|
|
|
25,626
|
|
|
|
24,903
|
|
Income before equity
in income of unconsolidated limited liability companies ("LLCs"),
interest expense, hurricane insurance recovery proceeds and
gain
|
|
|
6,588
|
|
|
|
7,607
|
|
|
|
12,812
|
|
|
|
13,747
|
|
Equity in
income of unconsolidated LLCs
|
|
|
454
|
|
|
|
425
|
|
|
|
884
|
|
|
|
854
|
|
Hurricane
insurance recovery proceeds in excess of damaged property
write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,535
|
|
Hurricane
business interruption insurance recovery proceeds
|
|
|
-
|
|
|
|
194
|
|
|
|
-
|
|
|
|
1,162
|
|
Gain on sale of
land
|
|
|
-
|
|
|
|
-
|
|
|
|
250
|
|
|
|
-
|
|
Interest expense,
net
|
|
|
(2,781)
|
|
|
|
(2,421)
|
|
|
|
(5,473)
|
|
|
|
(4,889)
|
|
Net income
|
|
$
|
4,261
|
|
|
$
|
5,805
|
|
|
$
|
8,473
|
|
|
$
|
15,409
|
|
Basic and diluted
earnings per share
|
|
$
|
0.31
|
|
|
$
|
0.42
|
|
|
$
|
0.62
|
|
|
$
|
1.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - Basic
|
|
|
13,730
|
|
|
|
13,720
|
|
|
|
13,729
|
|
|
|
13,719
|
|
Weighted average
number of shares outstanding - Diluted
|
|
|
13,749
|
|
|
|
13,720
|
|
|
|
13,748
|
|
|
|
13,719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a.) Includes bonus
rental on UHS hospital facilities of $1,352 and $1,204 for the
three-month periods ended June 30, 2019 and 2018, respectively, and
$2,746 and $2,530 for the six-month periods ended June 30, 2019 and
2018, respectively.
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Three Months
Ended June 30, 2019 and 2018
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
4,261
|
|
|
$
|
0.31
|
|
|
$
|
5,805
|
|
|
$
|
0.42
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal adjustments
to net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted net
income
|
|
$
|
4,261
|
|
|
$
|
0.31
|
|
|
$
|
5,805
|
|
|
$
|
0.42
|
|
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
4,261
|
|
|
$
|
0.31
|
|
|
$
|
5,805
|
|
|
$
|
0.42
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
6,426
|
|
|
|
0.47
|
|
|
|
5,959
|
|
|
|
0.44
|
|
Unconsolidated
affiliates
|
|
|
291
|
|
|
|
0.02
|
|
|
|
254
|
|
|
|
0.02
|
|
FFO
|
|
$
|
10,978
|
|
|
$
|
0.80
|
|
|
$
|
12,018
|
|
|
$
|
0.88
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
0.680
|
|
|
|
|
|
|
$
|
0.670
|
|
Universal Health
Realty Income Trust
|
Schedule of Non-GAAP
Supplemental Information ("Supplemental Schedule")
|
For the Six Months
Ended June 30, 2019 and 2018
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
Calculation of
Adjusted Net Income
|
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
8,473
|
|
|
$
|
0.62
|
|
|
$
|
15,409
|
|
|
$
|
1.12
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Hurricane
insurance recovery proceeds in excess of damaged property
write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,535)
|
|
|
|
(0.33)
|
|
Less: Gain on sale of
land
|
|
|
(250)
|
|
|
|
(0.02)
|
|
|
|
-
|
|
|
|
-
|
|
Subtotal adjustments
to net income
|
|
|
(250)
|
|
|
|
(0.02)
|
|
|
|
(4,535)
|
|
|
|
(0.33)
|
|
Adjusted net
income
|
|
$
|
8,223
|
|
|
$
|
0.60
|
|
|
$
|
10,874
|
|
|
$
|
0.79
|
|
|
Calculation of
Funds From Operations ("FFO")
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
2019
|
|
|
June 30,
2018
|
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
|
Amount
|
|
|
Per
Diluted Share
|
|
Net income
|
|
$
|
8,473
|
|
|
$
|
0.62
|
|
|
$
|
15,409
|
|
|
$
|
1.12
|
|
Plus: Depreciation and
amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
investments
|
|
|
13,134
|
|
|
|
0.96
|
|
|
|
12,110
|
|
|
|
0.88
|
|
Unconsolidated
affiliates
|
|
|
574
|
|
|
|
0.04
|
|
|
|
525
|
|
|
|
0.04
|
|
Less: Hurricane
insurance recovery proceeds in excess of damaged property
write-downs
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,535)
|
|
|
|
(0.33)
|
|
Gain
on sale of land
|
|
|
(250)
|
|
|
|
(0.02)
|
|
|
|
-
|
|
|
|
-
|
|
FFO
|
|
$
|
21,931
|
|
|
$
|
1.60
|
|
|
$
|
23,509
|
|
|
$
|
1.71
|
|
Dividend paid per
share
|
|
|
|
|
|
$
|
1.355
|
|
|
|
|
|
|
$
|
1.335
|
|
Universal Health
Realty Income Trust
|
Consolidated Balance
Sheets
|
(dollar amounts in
thousands, except share data)
|
(unaudited)
|
|
|
|
June
30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Assets:
|
|
|
|
|
|
|
|
|
Real Estate
Investments:
|
|
|
|
|
|
|
|
|
Buildings and
improvements and construction in progress
|
|
$
|
560,089
|
|
|
$
|
557,650
|
|
Accumulated
depreciation
|
|
|
(183,857)
|
|
|
|
(173,316)
|
|
|
|
|
376,232
|
|
|
|
384,334
|
|
Land
|
|
|
53,396
|
|
|
|
53,396
|
|
Net Real Estate Investments
|
|
|
429,628
|
|
|
|
437,730
|
|
Investments in limited
liability companies ("LLCs")
|
|
|
4,962
|
|
|
|
5,019
|
|
Other
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
6,072
|
|
|
|
5,036
|
|
Base and bonus rent
and other receivables from UHS
|
|
|
2,806
|
|
|
|
2,739
|
|
Rent receivable -
other
|
|
|
7,070
|
|
|
|
7,469
|
|
Intangible assets (net
of accumulated amortization of $24.7 million and
$27.6
million, respectively)
|
|
|
15,754
|
|
|
|
17,407
|
|
Right-of-use land
assets
|
|
|
8,862
|
|
|
|
-
|
|
Deferred charges and
other assets, net
|
|
|
7,597
|
|
|
|
8,356
|
|
Total Assets
|
|
$
|
482,751
|
|
|
$
|
483,756
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Line of credit
borrowings
|
|
$
|
191,550
|
|
|
$
|
196,400
|
|
Mortgage notes
payable, non-recourse to us, net
|
|
|
61,562
|
|
|
|
64,881
|
|
Accrued
interest
|
|
|
422
|
|
|
|
450
|
|
Accrued expenses and
other liabilities
|
|
|
11,139
|
|
|
|
11,765
|
|
Dividends
payable
|
|
|
9,354
|
|
|
|
-
|
|
Ground lease
liabilities
|
|
|
8,862
|
|
|
|
-
|
|
Tenant reserves,
deposits and deferred and prepaid rents
|
|
|
11,322
|
|
|
|
11,650
|
|
Total Liabilities
|
|
|
294,211
|
|
|
|
285,146
|
|
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: 2019 -
13,755,930;
2018 -
13,746,803
|
|
|
138
|
|
|
|
137
|
|
Capital in excess of
par value
|
|
|
266,252
|
|
|
|
266,031
|
|
Cumulative net
income
|
|
|
650,789
|
|
|
|
642,316
|
|
Cumulative
dividends
|
|
|
(728,639)
|
|
|
|
(710,006)
|
|
Accumulated other
comprehensive income
|
|
|
-
|
|
|
|
132
|
|
Total Equity
|
|
|
188,540
|
|
|
|
198,610
|
|
Total Liabilities and Equity
|
|
$
|
482,751
|
|
|
$
|
483,756
|
|
View original
content:http://www.prnewswire.com/news-releases/universal-health-realty-income-trust-reports-2019-second-quarter-financial-results-300891452.html
SOURCE Universal Health Realty Income Trust