Medical Properties Trust reports robust tenant performance and strategic initiatives, aiming for over $1 billion in cash rent by 2026.

Thank you for standing by. My name is Kayla and I will be your conference operator today. At this time, I'd like to welcome everyone to the Medical Properties Trust third quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise during this 60 minute call. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you'd like to withdraw your question, press STAR followed by the number one again. Thank you. I would now like to turn the call over to Charles Lambert, Senior Vice President. Please go ahead.

Good morning. Welcome to the Medical Properties Trust conference call to discuss our third quarter 2025 financial results. With me today are Edward K. Aldag Jr. Chairman, President and Chief Executive Officer of the Company, Stephen Hamner, Executive Vice President and Chief Financial Officer Kevin Hanna, Senior Vice President, Controller and Chief Accounting Officer Rosa Williams, Senior Vice President of Operations and Secretary and Jason Fry, Managing Director, Asset Management and Underwriting. Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at medicalpropertiestrust.com and in the Investor Relations section. Additionally, we're hosting a live webcast of today's call which you can access in that same section. During the course of this call we will make projections and certain other statements that may be considered forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward looking statements. We refer you to the Company's reports filed with the Securities and Exchange Commission for discussion of the factors that could cause the Company's actual results or future events to differ materially from those expressed in this call. The information being provided today is as of this date only and except as required by the Federal securities Laws, the Company does not undertake a duty to. Update any such information. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Regulation G requirements. You can also refer to our website at medicalpropertiestrust.com for the most directly comparable financial measures and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Thank you, Charles, and thanks to all of you for joining us this Morning on our third quarter 2025 earnings call. Before you hear from the rest of the team, I'll spend a few minutes discussing recent strategic updates, including a few notable developments during the quarter in the Prospect bankruptcy process. First, across all asset types, our tenants are delivering exceptional performance. General acute care operators reported a more than $200 million increase in EBITDARM year over year, with tenants such as LifePoint Health and Scion Health delivering double digit percentage revenue increases during the quarter. Post Acute operators reported a $50 million EBITDARM increase versus the same quarter last year. That includes Earnest Health up 17%, Vibra up 33% and median up 7%. Finally, in our Behavioral Health portfolio, EBITDARM increased $10 million year over year. Rosa will share more details on this performance trends across our portfolio shortly In August, KPC Health in California was named the successful bidder for Prospect's six California facilities. We promptly agreed to a new lease agreement with KPC, the terms of which are broadly similar to those agreed to with the other operators in our transitional portfolio. All rent will be deferred for the first six months, ramping to 50% for an additional six months and then reaching total stabilized annual rent of $45 million per year thereafter. More recently, we reached a settlement agreement with Yale, New Haven and Prospect whereby Prospect will receive $45 million from Yale. This payment from Yale will be additive to the ultimate proceeds that Prospect receives for these properties. Prospect has already entered into an agreement to sell two of its Connecticut facilities to another operator and is actively engaged in negotiation with buyers around the third hospital. Finally, our portfolio of new tenants continues to ramp up monthly rent on schedule with a few exceptions there are mentioned that are mentioned in our press release. We have collected all rent due from these operators through October, including 100% of rent from HSA. In August, we sold two facilities from this portfolio in Phoenix, Arizona to a tenant for approximately $50 million pursuant to a purchase option in the lease, we continue to own approximately 15 acres of land in the area. We are increasingly confident in our ability to generate total annualized cash rent of more than $1 billion by year end 2026. Notably, this 1 billion dollar target does not reflect any rent contributions from any of the California Prospect properties. Reflecting this confidence as well as our strong belief that that our share price remains significantly undervalued, our Board of Directors has authorized a new $150 million share repurchase program that we intend to deploy opportunistically. Furthermore, I want to call your attention to a comprehensive reaffirmation of our business model presentation posted to our website earlier this week. In this presentation we directly address a range of false narratives that critics have been spreading about our business model. We believe it is important that shareholders, operators, journalists and lawmakers all have a complete understanding of the truth around mpt. There remains a dynamic macro policy environment, making the permanent and flexible capital solutions that NPT offers more important now than ever.

Rosa thank you Ed. As always, I will cover some highlights from the quarter across our diverse global portfolio, beginning with Europe. As a reminder, international operators comprise approximately 50% of our total portfolio. We continue to be pleased with the consistency of coverages exceeding two times across this portfolio. This performance reflects these operators strategic focus on high quality patient care as well as continuous expansion of access to care within their communities. In the uk, Circle repeatedly ranks among the highest of all healthcare operators in patient satisfaction, maintaining a reputation score well above its next closest competitor. Circle continues to make significant investments in advanced technologies including AI and robotics, strengthening its competitive advantages and reinforcing its position as one of the leading healthcare providers in the UK market. Our Sulis Bath Hospital in the UK is the first independent hospital to receive accreditation as an elective surgical hub deemed by the NHS and the Royal College of Surgeons of England. This recognition highlights the hospital's high standards in clinical performance, operational efficiency and patient care. With coverages consistently above two times, Priory has demonstrated its ability to adapt its service lines to the needs of each market, allowing for flexibility as the NHS mental health model evolves. Priory continues to explore technological opportunities such as its partnership with Siomix to launch an innovative digital pathway that aims to revolutionize access to personalized mental health care. In Germany, Medium continues to report strong negotiated reimbursement rates and occupancy trends, enabling them to meaningfully outperform prior year revenue and earnings. In Switzerland, Swiss Medical has launched integrated care models in each of the French, German and Italian speaking regions with these new platforms successfully supplementing Swiss Medical's strong organic growth. EBITDARM grew more than 10% trailing 12 month year over year. In Spain, EMED continues to progress construction new hospitals and in Alicante and Barcelona with scheduled openings during 2026 with over 70% of construction completed. Turning to our US portfolio, Earnest Health has continued increasing consolidated coverage every quarter over the past year, with legacy IRFs reporting strong results and new developments rapidly ramping. As such, consolidated EBITDARMM coverage is now approaching 2.4 times. LifePoint Health continues to deliver high margin growth at a steady stable rate versus the rapid acceleration observed in 2024. Kahnema Memorial continues to be the most significant growth driver within LifePoint MPT's LifePoint portfolio with trailing 12 month admissions increasing 15% year over year. Surgery Partners 3 facilities delivered another quarter of strong performance with consolidated EBITDARMM coverage above 6 times. Our hospital in Wisconsin recently completed a much anticipated expansion to their operating suite to accommodate additional surgeons wanting to bring cases to this respective facility. HSA continues to improve operations and staffing across markets with Q2 and Q3 EBITDARMM coverage approaching one times on fully ramped rent, which as a reminder does not fully ramp until September of 2026. Summer seasonality drove softer volumes in the third quarter, but revenue remained strong due to a higher patient acuity mix. MPT has committed to funding approximately $40 million over the next two years for necessary infrastructure and other capital improvement projects including H Vac and elevator replacements. The vast majority of this amount is for a newly constructed seven story parking deck. These costs will be added to the lease base upon which the tenants will owe rent. Onr Health launched its rebranding in Arizona by renaming Mountain Vista to Four Peaks Medical Center. In addition, ONRR remains focused on physician recruitment, executing its self funded CAPEX strategy and upgrading facilities ahead of anticipated volume recovery. Quorum Health's Odessa facility continues to improve performance with stronger than expected admissions and surgical volumes. In August, Odessa Regional announced that it achieves Silver certification as a Cribs for Kids National Safe Sleep Hospital, demonstrating adherence to rigorous guidelines established by the Cribs for Kids National Safe Sleep Hospital Certification Program. Insight Health reopened ER Services at Trumbull, Ohio earlier this month with plans to slowly open more services as volumes come back along with physicians and staff. Prime Healthcare's MPT facilities continue to show improved performance with ebitdarm coverage over two times as volumes and ER conversion rates have increased across the portfolio. Prime received credit rating upgrades from Fitch, Moody's and S and P during the third quarter. Pipeline Health continues to demonstrate growth with ebitdarm coverage over two times. Additionally, they are opening new service lines for patients at all four hospitals. In summary, we are very encouraged by performance trends across our portfolio. Our portfolio of new tenants continues to ramp monthly rent payments and we remain well positioned to generate significant cash flow from our 388 properties and approximately 39,000 licensed beds around the world, enabling us to create value for shareholders moving forward. Kevin thank you Rosa.

Today we reported normalized FFO of $0.13 per share the third quarter of 2025. The normalized FFO result would have been $0.01 higher if not for the payment of September rent by cash basis HMedical Properties Trust on October 1. These results fully reflect the full quarter dilutive impact of not only our first quarter secured bonds but the second quarter median joint venture refinancing Higher G&A expense versus the second quarter also impacted Generally Accepted Accounting Principles (GAAP) results, primarily driven by higher stock compensation expense resulting from the change in the fair Market value of 2024 and 2025 Performance based equity compensation of which no shares have been earned or vested. As of September 30, 2025. Our earnings from equity interest were higher in the quarter as changes in German tax policy resulted in a net deferred tax benefit to our German JV and as the value of the underlying real estate in the CommonSpirit joint venture continues to adjust upwards. Neither of these items are included in our normalized FFO results. We recorded approximately $82 million in net impairments, the majority of which related to prospect and the decline in expected proceeds of certain Pennsylvania and Rhode island assets. We continue to expect that cash proceeds from both the settlement with Yale and Connecticut and the sale of the Connecticut. Facilities. Will be more than sufficient to repay MPT's outstanding dip loan balances. Despite this expectation, accounting rules require that we record impairments to our prospect carrying values. There are other immaterial adjustments to carrying values during the quarter, including routine adjustments to marketable securities that were disclosed as noncash fair value adjustments in our reporting. I will now hand the call over to Steve to discuss our liquidity and capital strategy moving forward.

Steve thank you, Kevin. I'll wrap up quickly with just a few points, none of which will be surprising, and then we can take any questions. First, a quick summary of the strategies we have been executing for repaying and otherwise addressing future maturities. We've sold at significant gains and financed at above book values many billions of dollars in highly attractive hospital assets. Almost without exception, these transactions have provided clear validation of our underwriting rigor and the resulting asset values. Access to these values has given us the assurance and flexibility to repay and refinance several billion dollars of debt in 2025 alone. The secured notes we issued in February are now trading at significant premiums, and our most recent transaction financed more than $2 billion of German rehabilitation hospitals at a 5.1% coupon. This access to capital has also given us the ability to re tenant and begin collecting what is now scheduled to be in an incremental $200 million plus in annual cash rent from new operators, resolve the issues around Prospect bankruptcies and address debt maturing in 2027 and beyond, all of which we are doing successfully along with our clear visibility into rent, ramping to a scheduled incremental 200 plus million dollars, the upcoming 2026 annual escalations, cash payment of our roughly $100 million dip loan, and periodic asset sales similar to what we have reported in the last few quarters. We also have reason to expect even more liquidity. Specifically, and while there is no certainty Prospect is expected to generate proceeds in excess of the $100 million balance of our DIP loan, a substantial majority of any such proceed will flow to mpt. We are evaluating the sale or lease of several assets which are not currently yielding meaningful returns and we also continue to evaluate sales of earning assets and portfolios for attractive gains. For example, Aevis Victoria, our co owner of Infracore and the parent of Infracore's Swiss medical network lessee, is currently exploring various strategic options for its affiliates including Infracorep, to support their long term development. Infracore is considering various opportunities to open up its capital or even list on a stock market in order to meet the growing demand for sale and leaseback solutions in the public and private hospital market in Switzerland. As this and other market indicators demonstrate, demand for hospital real estate is strong across virtually all geographies. Our cost of capital is still higher than we expect it will be, but as we have previously said, we may make modest acquisitions when strategically important. But as Ed pointed out, repurchasing our own common stock is among our very best and most accretive uses of capital and for that reason we announced this morning that we have implemented a $150 million strategic stock repurchase plan that will make available some of this expected growing liquidity to capture that permanent value. This announcement demonstrates our conviction that that recent prices of our common stock do not reflect our assets underlying value and we have therefore not issued any shares under our recently implemented at the Market Offering program. We reestablished that program and the long term opportunistic flexibility it provides us in August shortly after the effectiveness of our new three year shelf registration statement. Importantly, some of our unsecured notes outstanding still trade at discounts in today's markets and nothing we may consider with respect to share repurchase or ATM programs rules out continued duration of possible debt refinancing or redemption strategies. We've conclusively demonstrated that we have the asset values to accomplish these strategies. Moreover, as you would expect, we carefully monitor and plan for the maintenance of all debt covenants as we look into possible future capital transactions. We consciously designed and negotiated these covenants to provide us the opportunistic flexibility to execute these strategies and we are confident that we will do so. And with that, I will turn the call back to the operator to queue any questions. Kayla.

At this time I'd like to remind everyone, in order to ask a question, press Star, then the number one on your telephone keypad. Please limit to one question and one follow up. Your first question comes from the line of Mike Mueller with J.P. Morgan. Your line is open.

Yeah, hi. I guess on the buyback the questockion's here. I mean, how do you weigh looking at a buyback versus using the capital to either, you know, pay down debt, buy back other debt, justock given where the leverage level is today and you know, even on a pro forma basis where it'll be. And I guess the follow up to that is in terms of funding a buyback, would you only, you know, use asset sales or would you use cash on hand or cap the credit line? Justock, can you justock put that whole buyback into perspective for us?

Sure, Mike. We first of all have a number of opportunities and we've been talking about these for several quarters and that's reinvesting the business with, as I mentioned and as we've done on a very limited basis, strategically buying new assets. We certainly recognize the trading volumes and levels of some of the unsecured bonds that could provide attractive opportunities for tendering or repurchasing on either small or large scale. And we recognize, as we just conceded, that we think our shares are significantly undervalued. So we have all of those options. We have resources available. We will continue to evaluate the opportunities and the timing of those opportunities and the sources of that capital. I can't say I doubt we're going to borrow money, incremental money in order to fund a buyback. And we've mentioned a few of the increasing, possibly increasing cash resources that we'll have, including some assets that are currently not earning much, if anything, and possibly some of the well received earning assets that we've demonstrated. Just as in the last several billion dollars of asset sales, we expect any additional asset sale earning asset sales would also be a very attractive profitable gains. So all of that is available and as we've been doing for a couple of years now, we evaluate periodically, constantly, in fact, what's the best use of the available capital that we have.

Got it. Okay, appreciate it.

Thank you.

And your next question comes from the line of Michael Carroll with RBC Capital Markets. Please go ahead.

I just want to follow up with Mike's questions related to the buyback. I mean, is this, can you kind of highlight the timing of this, of when some of these purchases could occur? I mean, I know you have a big debt maturity in 2027. You still are pooling money on the line of credit to meet some of the debt covenant. You're still kind of cash flow negative, at least in terms of some of the investments you made. I guess post that. I mean, do we need to have all that kind of resolved before you start to buy back stock. Are you willing to do that in the near term?

Yeah, Mike, I think you should assume it will start immediately.

Okay. And then, Ed, can you give us an update on hsa? I know you had some positive commentaries on their progress and the ramp up that they've been doing. Maybe provide some details on what drove the late September rent payment. And is that a concern that like, does that cause you any concerns of their ability to pay the ramped up rent over time? Can you provide some color on that?

Sure. They continue to perform very well. The biggest improvements in Florida come from recruiting the doctors back to the facilities that left during the steward debacle. They also have been extremely successful, probably exceeding even our expectations. And in Texas, from the standpoint of their cash delay in October and September. Excuse me, it was the, we believe the final steps of getting the Transition Services Agreement (TSA) in order, getting the money repaid to the lender that they had for the DIP financing in Florida. And we do not expect any additional issues. Now I'll just point out one last thing. And remember September the rent actually doubled. And so they paid twice in September, actually on October 1st and what they had been paying. And again, I think we made clear in the press release they've already paid October rent.

Okay, great, thanks.

And your next question comes from the line of Farrell Granoff with Bank of America. Please go ahead.

Thank you. And good morning. I was just wondering if you could add a little commentary around the Yale New Haven hospitals. I saw the update with having at least two with greater line of sight of a potential close. Is there anything else that you can share? And also the potential third, if there's. Been further interest so far, I think.

You'Re going to need to repeat that no one around the table heard the. First part of your question.

Oh, so sorry about that. I was just asking about The Yale New Haven hospitals and the progress on having those either released or sold under the binding agreements, or is that involved as well as the third property?

Yeah, sure. So the two facilities are under binding agreement. We expect those to close hopefully before year end, if not shortly thereafter. The other one, we hope to have a binding agreement imminently with another buyer.

Okay, thank you. And also I saw a little bit of commentary on the NHS restructuring and impacting of the referral on the behavioral providers. Does that grant you any concern on the future health of that sector for Priory for their ecdarm coverage? Or does that maybe add a little target if that could be something to dispose of and use for capital funding?

So we've talked about this in the last quarter. I know, perhaps the one before too. So nhs, as they did with acute care a few years back, they want to try to keep as much of their mix of patients in their own hospitals. And now they're doing the same thing with behavioral. It's our belief that they ultimately will realize the benefit of having independent hospitals to treat some of those patients because they're just the resources are needed in the independent sector to assist with getting the volume of patients treated. So no, we think it's short term and we'll come back around. And in the meantime, Priory has, you know, as evidenced by their two times coverage, been able to put operational items in place to continue to perform very well. The operator there does not expect to see a significant decrease in their coverage.

Okay, thank you so much.

And your next question comes from the line of Amoteo Agisanya with Deutsche Bank. Your line is open.

Yes. Good morning everyone. In terms of the rent collections in the quarter, I think in the press release you did mention that there was maybe not as much of collection as you expected in Pennsylvania and Ohio. Curious if that relates to insight in particular and if you could just kind of give us an update on that, on that asset transition.

Yes, Otago, it's almost exclusively the Ohio facility. As you probably know. Probably read, they were delayed in reopening the facility that has gotten open. State Senator Moreno has been very helpful in that. So we expect that to change. We have delayed when we expect their actual full rent to begin. I believe that's moved to January and then in Pennsylvania. That's a very, very small amount of money. That facility continues to improve and not exactly sure when that one will start paying rent. That's a $30,000 a month rent payment, Diane.

Gotcha. Okay, that's helpful. And then just kind of looking through the sup. It Looks like there was some additional about 20 million of new loans in the quarter. Just kind of curious if you could kind of talk us through who that was to, if it's to any of the kind of operators of the assets in transition.

There were two loans to operators, one being Insight, and that was for Capex and for reopening cost, and then there was a loan to the facility in Pennsylvania, Tenor, and that too, was for Capex.

Gotcha. That's helpful. And then another one for me. The eight assets you took back, 23 assets. Fifteen were at least eight were kind of out there. And you kind of, you know, we're kind of looking at what to ultimately do with those eight assets, including some of the developments. Could you just walk us through kind of the status of those eight and kind of what's happening?

Tyo I'm not sure exactly. The eight, I guess the two big ones would be the one in Massachusetts and Norwood and then the other one in Texas and Texarka. Both of those facilities remain under construction. And other than about all I can say at this particular point because of various NDAs, we are in negotiations with people about those facilities.

Gotcha. Thank you.

I will now turn the call back over to Ed Aldag for closing remarks.

Thank you very much and thank you all for joining us. As always, if you have any questions, please don't hesitate to reach out to Drew and we'll get back with you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.