MEDICAL PROPERTIES TRUST INC Q1 FY2025 earnings call

• Broader market: Healthcare is recession-resistant; MPT's business model helps hospitals access affordable capital. - Strategic updates: Issued over $2.5 billion of seven-year secured bonds in February; working on solutions for Ohio facilities affected by Steward disputes; Prospect assets marketing ongoing. - Portfolio highlights: New tenants like HSA, Honor Health, Quorum Health, College Health, Tenor Health ramping operations; established portfolio operators in Europe (Circle Health, Priory, Ramsey, Swiss Medical) and US (Ernest Health, LifePoint Health, surgery partners) performing well. - Financial results: GAAP net loss of $0.20 per share, normalized FFO of $0.14 per share; impairments and fair value adjustments made on various investments. - Refinancing: February secured notes offering strengthened balance sheet; cash rent from Steward facilities to increase from $4M in Q1 to over $23M in Q4 2025.

For the first quarter of 2025, Medical Properties Trust reported a GAAP net loss of $0.20 per share and normalized FFO of positive $0.14 per share. The first quarter net loss and normalized FFO were affected by the partial quarter impact of February debt refinancing transactions, normalization of cash rent payments from a small tenant, and higher stock compensation expense. The portfolio saw strong operator trends with hospitals producing strong revenues, admissions growth, and EBITDARM coverage improvements. New tenants in the transitional portfolio were ramping as expected, and established portfolio operators in various regions (Europe, US) showed solid performance.

• Second quarter normalized FFO expected to be reduced by approximately $0.02 per share due to higher interest expense from refinancing. - Cash rents from former Steward facilities scheduled to increase from $4M in Q1 2025 to over $23M in Q4 2025, reaching $160M annualized by October 2026. - Expect cash earnings to escalate annually with current portfolio performance.

• Steward bankruptcy process issues: Professional fees high, payments to new operators withheld (e.g., $20M owed in Ohio, $55M in Florida Medicaid funds). - Impairments: Approximately $73M in impairments and fair value adjustments on Prospect, real estate in Connecticut, PHP; $11M impairment on mortgage investments in Colombia due to government reimbursement limits. - Reimbursement uncertainties: Potential Medicaid cuts, though MPT tenants not currently nervous about Medicare/Medicaid changes.

Q: Do you think there is risk to the Steward transitioned assets and rent ramp up given issues in the Steward bankruptcy process?

A: No, as operators are performing well despite disruptions, transition expected to complete soon and issue resolve.

Q: Talk about the $40 million investment and other investments in the quarter?

A: $40M investment included getting back assets from a secured creditor at a discount; modest investment in a Swiss hospital with Infracore; $10M added to Florida operator working capital loan.

Q: What are you monitoring on the regulatory side and potential Medicaid cuts?

A: Not nervous about Medicare/Medicaid changes, as MPT welcomes some Medicare cuts.

Q: Expect to provide loans to operators and any tenants on watch list?

A: No expected loans, no operators on watch list.

Q: How does the cash ramp up for transitional tenants work?

A: Rent goes from 25% to 100% by Q4 2026, with each lease slightly different.

Q: Will drawdown on line to monitor covenants occur again?

A: Available as a cushion, but no expectation currently of needing it again, depends on various factors.