American Healthcare REIT, Inc. Q4 FY2024 earnings call

• Celebrated the anniversary of being a listed healthcare REIT. - Strong same-store NOI growth in Q4 2024, meeting long-term care needs. - Trilogy segment is the largest, contributed to growth, with CMS star rating over 4 stars on average. - Focus on accretive external growth, including acquisitions, lease buyouts, and development projects. - Net debt to adjusted EBITDA improved from 8.5 times at end of 2023 to 4.3 times at end of 2024. - Portfolio refined with opportunistic dispositions and equity raised via ATM program.

In the fourth quarter of 2024, total portfolio same-store NOI grew 21.6% year over year. For the full year 2024, same-store NOI growth was 17.7%. The Trilogy segment had same-store NOI growth of 23.8% in 2024, and the shop segment had same-store NOI growth of 52.8% in 2024. NOI from Trilogy and shop segments was 71% of total NOI as of the end of the fourth quarter in 2024.

• Total portfolio same-store NOI growth guidance for 2025 is 7% to 10%. - Segment-wise: Trilogy 10% to 12% growth, outpatient medical -1% to 1% growth, shop segment 18% to 22% growth, triple net leased properties -1.5% to 0.5% growth. - NFFO per fully diluted share guidance for 2025 is $1.56 to $1.60, not assuming additional capital markets or transaction activity beyond announced ones.

• Potential policy changes in healthcare, particularly related to Medicaid. - Seasonality impact on Trilogy and shop segments, e.g., colder months and flu season affecting occupancies differently between segments.

Q: When you're thinking about the tipping point of occupancy, and specifically in Trilogy, when you're thinking about the tipping point of occupancy and when you can really start pushing rate and really start seeing that margin expansion A: Danny Prosky said occupancy is well above pre-COVID levels and rates are increasing, expecting continued growth. Gabe Willhite added about demand still coming, AL occupancy in high eighties, and opportunities like RevPOR growth exceeding expense growth.

Q: Can you give a little bit more color in how you're thinking about Medicaid exposure and specifically in the Trilogy, more on the operating exposure that you have A: Danny Prosky said Medicaid exposure in Trilogy is about 21%, exposure is shrinking, and changes to Medicaid are uncertain, but Trilogy can pivot to other lines of business if needed.

Q: Maybe just getting back to kind of the upper opportunity set within Trilogy and the margin expansions. Where could we see margins get to?

A: Danny Prosky said margins are back to pre-COVID levels and expected to continue rising with more AL and IL, RevPOR growth exceeding expense growth. Gabe Willhite added about demand, value-based care, and Medicare Advantage opportunities driving margin expansion.

Q: Can you provide some details on how many Trilogy developments and expansions that you completed in 2024? I guess maybe what's in process right now and the guidance that you quoted in the call about how many you plan on starting in 2025 A: Danny Prosky said there were several developments in 2024, with $130 million announced for 2025 including new campuses, villas, and expansions. Brian Peay clarified guidance for development spend is $80 to $100 million.

Q: Are there any other seasonal considerations included in guidance that could impact the sequential growth through the year and sort of cadence of NOI after you get through the first quarter?

A: Brian Peay mentioned fewer days in Q1, increased utility costs, and reset on some taxes as headwinds in Q1.

Q: Maybe going back to your comments on the levers that Trilogy can pull in the event that they want to move away from Medicaid a bit. What's a reasonable floor in terms of percentage of revenue coming from Medicaid that Trilogy could actually get to?

A: Danny Prosky said Trilogy could reduce Medicaid revenue, but it's hard to predict a specific floor, and Gabe Willhite added Trilogy has physical plan flexibility to pivot to other lines of business.

Q: Maybe going back to your comments on the outpatient business. Where do you expect occupancy to drop at within your portfolio?

A: Danny Prosky said outpatient medical occupancy is likely to remain flat with some expirations and backfilling, and Brian Peay mentioned expirations starting in April and ending in November with efforts to backfill.