Medical Properties Trust, Inc. Reports Third Quarter Results

Per Share Net Income of $0.37 and Normalized FFO of $0.45 in Third Quarter

Year-to-Date Capital Recycling Transactions Generate Approximately $1.8 Billion of Cash

Medical Properties Trust, Inc. (the “Company” or “MPT”) (NYSE: MPW) today announced financial and operating results for the third quarter ended September 30, 2022, as well as certain events occurring subsequent to quarter end.

• Net income of $0.37 and Normalized Funds from Operations (“NFFO”) of $0.45 for the 2022 third quarter on a per diluted share basis;

Previously announced activities:

• Declaration in August of a regular quarterly dividend of $0.29 per share, representing a third quarter payout of adjusted funds from operations (“AFFO”) per share of roughly 81%;
• Sale of eleven facilities to Prime Healthcare (“Prime”) and the repayment to MPT of various loans combined to contribute to a significant reduction in short-term debt in the third quarter;
• Expected acquisition by a subsidiary of LifePoint Health, Inc. (“LifePoint”) of a majority interest in Springstone Health OpCo, LLC (“Springstone”) that would result in an approximate $200 million loan repayment to MPT upon closing in the first half of 2023; and
• Agreement to sell three hospitals in Connecticut to Prospect Medical Holdings (“Prospect”) for an aggregate sale price of roughly $457 million in 2023.

“Performance at our facilities generally improved during the second and third quarters, reflecting the resilience of well-underwritten, infrastructure-like hospitals,” said Edward K. Aldag, Jr., Chairman, President, and Chief Executive Officer. “Forecasted escalations in our CPI-linked leases point to overall cash rent growth in the four to five percent range for next year, a pace likely to match up well with anticipated hospital industry revenue trends.”

Included in the financial tables accompanying this press release is information about the Company’s assets and liabilities, net income, and reconciliations of net income to NFFO and AFFO, including per share amounts, all on a basis comparable to 2021 results, as well as reconciliations of total assets to total adjusted gross assets and total revenues to total adjusted revenues.

PORTFOLIO UPDATE

Inclusive of total proceeds received from its first quarter real estate partnership transaction with Macquarie Asset Management, proceeds from third quarter asset sales and loan repayments and other transactions, MPT has sourced approximately $1.8 billion in cash from capital recycling transactions year-to-date. In addition, as previously announced, the Company expects to receive more than $650 million in proceeds in 2023 from other binding agreements. Forecasted proceeds from these transactions and any other potential dispositions, loan repayments and/or joint venture transactions are expected to fund debt reduction, potential stock repurchases and selective investments.

During the third quarter, Steward completed the accelerated repayment of amounts due related to approximately $450 million in COVID-related advances and collected approximately $70 million of past due reimbursements under the Texas Medicaid program. With these cash drains now in the past, positive revenue trends, significant declines in contract labor utilization and anticipated annual savings resulting from adjustments to Steward’s cost structure are expected to result in positive and sustainable free cash flow.

The Company has total adjusted gross assets of approximately $21.1 billion, including $14.8 billion of general acute care hospitals, $2.2 billion of behavioral health facilities, $1.9 billion of inpatient rehabilitation facilities, $0.3 billion of long-term acute care hospitals, and $0.3 billion of freestanding emergency room and urgent care properties. MPT’s portfolio, adjusted for the transactions described herein, includes approximately 435 properties and 44,000 licensed beds across the United States as well as in the United Kingdom, Switzerland, Germany, Australia, Spain, Finland, Colombia, Italy and Portugal. The properties are leased to or mortgaged by 54 hospital operating companies.

OPERATING RESULTS AND OUTLOOK

Net income for the 2022 third quarter ended September 30, 2022 was $222 million ($0.37 per diluted share) compared to $171 million ($0.29 per diluted share) in the prior year period.

NFFO for the 2022 third quarter was $272 million ($0.45 per diluted share) compared to $263 million ($0.44 per diluted share) in the prior year period.

The Company is increasing its estimate of 2022 per share net income to $1.99 to $2.01, including year-to-date gains on sales of approximately $537 million, and is also tightening its estimate of 2022 per share NFFO to $1.80 to $1.82 from a prior range of $1.78 to $1.82. MPT plans to provide initial estimates of 2023 per share net income and NFFO when it reports fourth quarter earnings.

These estimates do not include the effects, among others, of unexpected real estate operating costs, changes in accounting pronouncements, litigation costs, debt refinancing costs, acquisition costs, currency exchange rate movements, changes in income tax rates, interest rate hedging activities, write-offs of straight-line rent or other non-recurring or unplanned transactions. Moreover, these estimates do not provide for the impact on MPT or its tenants and borrowers from the global COVID-19 pandemic. These estimates may change if the Company acquires or sells assets in amounts that are different from estimates, market interest rates change, debt is refinanced or repurchased, new shares are issued or repurchased, additional debt is incurred, other operating expenses vary, income from equity investments vary from expectations, or existing leases or loans do not perform in accordance with their terms.

CONFERENCE CALL AND WEBCAST

The Company has scheduled a conference call and webcast for Thursday, October 27, 2022 at 11:00 a.m. Eastern Time to present the Company’s financial and operating results for the quarter ended September 30, 2022. The dial-in numbers for the conference call are 833-630-1956 (U.S.) and 412-317-1837 (Canada/International); no passcode is required. Call participants are to ask the operator to be joined to the Medical Properties Trust, Inc. conference call upon dialing in. The conference call will also be available via webcast in the Investor Relations section of the Company’s website, www.medicalpropertiestrust.com.

A telephone and webcast replay of the call will be available beginning shortly after the call’s completion. The telephone replay will be available through November 10, 2022 using dial-in numbers 877-344-7529 (U.S.), 855-669-9658 (Canada) and 412-317-0088 (International) along with passcode 5485534. The webcast replay will be available for one year following the call’s completion on the Investor Relations section of the Company’s website.

The Company’s supplemental information package for the current period will also be available on the Company’s website in the Investor Relations section.

The Company uses, and intends to continue to use, the Investor Relations page of its website, which can be found at www.medicalpropertiestrust.com, as a means of disclosing material nonpublic information and of complying with its disclosure obligations under Regulation FD, including, without limitation, through the posting of investor presentations that may include material nonpublic information. Accordingly, investors should monitor the Investor Relations page, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

About Medical Properties Trust, Inc.

Medical Properties Trust, Inc. is a self-advised real estate investment trust formed in 2003 to acquire and develop net-leased hospital facilities. From its inception in Birmingham, Alabama, the Company has grown to become one of the world’s largest owners of hospital real estate with approximately 435 facilities and 44,000 licensed beds (on an adjusted basis) in ten countries and across four continents. MPT’s financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information, please visit the Company’s website at www.medicalpropertiestrust.com.

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “estimate”, “target”, “anticipate”, “believe”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our strategies, objectives, future expansion and development activities, and expected financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results or future events to differ materially from those expressed in or underlying such forward-looking statements, including, but not limited to: (i) the economic, political and social impact of, and uncertainty relating to, potential impact from health crises (like COVID-19); (ii) the ability of our tenants, operators and borrowers to satisfy their obligations under their respective contractual arrangements with us, especially as a result of the adverse economic impact of the COVID-19 pandemic, and government regulation of hospitals and healthcare providers in connection with same (as further detailed in our Current Report on Form 8-K filed with the SEC on April 8, 2020); (iii) our expectations regarding annual guidance for net income and NFFO per share; (iv) our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate and integrate acquisitions and investments; (v) the nature and extent of our current and future competition; (vi) macroeconomic conditions, such as a disruption of or lack of access to the capital markets or movements in currency exchange rates; (vii) our ability to obtain debt financing on attractive terms or at all, which may adversely impact our ability to pursue acquisition and development opportunities and pay down, refinance, restructure or extend our indebtedness as it becomes due; (viii) increases in our borrowing costs as a result of changes in interest rates and other factors; (ix) international, national and local economic, real estate and other market conditions, which may negatively impact, among other things, the financial condition of our tenants, lenders and institutions that hold our cash balances, and may expose us to increased risks of default by these parties; (x) factors affecting the real estate industry generally or the healthcare real estate industry in particular; (xi) our ability to maintain our status as a REIT for federal and state income tax purposes; (xii) federal and state healthcare and other regulatory requirements, as well as those in the foreign jurisdictions where we own properties; (xiii) the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis; (xiv) the ability of our tenants and operators to operate profitably and generate positive cash flow, comply with applicable laws, rules and regulations in the operation of the our properties, to deliver high-quality services, to attract and retain qualified personnel and to attract patients; (xv) potential environmental contingencies and other liabilities; (xvi) the risk that the expected acquisition of a majority interest in Springstone by LifePoint does not occur; (xvii) the risk that the expected sale of three Connecticut hospitals currently leased to Prospect does not occur; and (xviii) the risk that other property sales, loan repayments, and other capital recycling transactions do not occur.

The risks described above are not exhaustive and additional factors could adversely affect our business and financial performance, including the risk factors discussed under the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and as updated in our quarterly reports on Form 10-Q. Forward-looking statements are inherently uncertain and actual performance or outcomes may vary materially from any forward-looking statements and the assumptions on which those statements are based. Readers are cautioned to not place undue reliance on forward-looking statements as predictions of future events. We disclaim any responsibility to update such forward-looking statements, which speak only as of the date on which they were made.

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