Executive Summary

AHR delivered another strong quarter led by ISHC (Trilogy) and SHOP: revenue rose to $542.5M, Adjusted EBITDA to $93.1M, and NFFO/share to $0.42; management raised FY25 NFFO and Same-Store NOI growth guidance on broad-based operating strength .
Q2 beat S&P Global consensus modestly on revenue and EBITDA, and more clearly on “Primary EPS” (S&P convention), driven by rate/mix optimization (notably Medicare Advantage), occupancy improvement and disciplined expense control; OM remained softer but near a bottom per management commentary* .
Balance sheet de-levering continued: Net Debt/Annualized Adjusted EBITDA improved to 3.7x vs 4.5x in Q1, supported by strong earnings and well-timed ATM issuance .
Guidance raised: FY25 NFFO/share to $1.64–$1.68 (from $1.58–$1.64), Total Portfolio SS NOI to 11–14% (from 9–13%), with upgrades at ISHC and OM; SHOP unchanged at robust 20–24% .
Likely stock reaction catalysts: guidance raise, de‑leveraging to sub-4x, accelerating operating portfolio growth (SS NOI up 13.9% YoY), and a still-robust awarded acquisition pipeline >$300M (not in guidance) .

What Went Well and What Went Wrong

What Went Well
- Operating outperformance: Total SS NOI +13.9% YoY; ISHC +18.3% and SHOP +23.0% on occupancy gains, RevPOR growth, and expense discipline .
- Pricing/mix tailwinds: ISHC ADR rose 7.8% YoY; Medicare Advantage days increased (7.2% vs 5.8%), with rates 79% higher than Medicaid and 42% higher than private pay, supporting rate realization .
- Balance sheet strength and capital execution: Net Debt/Annualized Adj. EBITDA to 3.7x from 4.5x; ~$188.6M Q2 ATM plus ~$126M forward settled post-quarter enhanced capacity for accretive growth .
What Went Wrong
- Outpatient Medical softness persisted: OM ending occupancy declined to 86.1% and Cash NOI margin eased; management expects near-term trough before improvement from Q4 .
- Impairments and non-core headwinds: Q2 included $12.7M impairment; portfolio pruning and non-core dispositions remain part of the thesis, diluting near-term GAAP results .
- Triple-Net modest growth: Same-Store NOI +1.4% YoY, with segment guidance still negative for FY25 (−0.8% to −0.3%), reflecting tempered momentum vs operating segments .

Financial Results

Quarterly performance vs prior periods

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$542.7	$540.6	$542.5
GAAP Diluted EPS ($)	$(0.21)	$(0.04)	$0.06
Adjusted EBITDA ($USD Millions)	$91.2	$85.1	$93.1
Total Cash NOI ($USD Millions)	$103.5	$101.0	$109.2
NFFO per diluted share ($)	$0.40	$0.38	$0.42

Year-over-year (Q2)

Metric	Q2 2024	Q2 2025
Revenue ($USD Millions)	$504.6	$542.5
GAAP Diluted EPS ($)	$0.01	$0.06
Adjusted EBITDA ($USD Millions)	N/A	$93.1
Total SS NOI ($USD Millions)	$86.8	$98.9
NFFO per diluted share ($)	$0.33	$0.42

Q2 2025 vs S&P Global consensus (headline metrics)

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$541.1*	$542.5	+$1.4
Primary EPS ($)	$0.11*	$0.153*	+$0.04
EBITDA ($USD Millions)	$89.6*	$93.1	+$3.5

Values with an asterisk are retrieved from S&P Global.

Drivers: ISHC/SHOP same-store NOI strength (+18.3%/+23.0%), ISHC ADR +7.8% YoY, and improved quality mix (higher Medicare Advantage penetration and rate) offset softer OM occupancy .

Segment breakdown (Q2 2025 Cash NOI)

Segment	Cash NOI ($USD Millions)	Mix
ISHC (Trilogy)	$67.1	61.5% (ann. cash NOI basis)
Outpatient Medical	$18.6	17.0% (ann. cash NOI basis)
SHOP	$14.9	13.6% (ann. cash NOI basis)
Triple-Net Leased	$8.6	7.0% (ann. cash NOI basis)
Total	$109.2	100%

KPIs and operating metrics

KPI	Q1 2025	Q2 2025
ISHC average occupancy	88.5%	88.8%
SHOP average occupancy	85.5%	85.7%
OM ending occupancy	87.4%	86.1%
ISHC total ADR ($)	$322.28	$347.31
SHOP RevPOR ($)	$5,246	$5,347

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net income per diluted share	FY 2025	$0.29–$0.35	$0.33–$0.37	Raised
NAREIT FFO per diluted share	FY 2025	$1.49–$1.55	$1.57–$1.61	Raised
NFFO per diluted share	FY 2025	$1.58–$1.64	$1.64–$1.68	Raised
Total Portfolio SS NOI growth	FY 2025	9.0%–13.0%	11.0%–14.0%	Raised
ISHC SS NOI growth	FY 2025	12.0%–16.0%	15.0%–19.0%	Raised
OM SS NOI growth	FY 2025	(1.0%)–1.0%	1.0%–1.5%	Raised/tightened
SHOP SS NOI growth	FY 2025	20.0%–24.0%	20.0%–24.0%	Maintained
Triple-Net SS NOI growth	FY 2025	(1.5%)–(0.5%)	(0.8%)–(0.3%)	Raised/tightened
Other assumptions: G&A $56–$58M; interest expense $85–$90M; dev. spend $80–$100M	FY 2025	—	Reiterated/updated	—

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 press; Q1’25 call)	Current Period (Q2’25 call)	Trend
Medicare Advantage (MA) mix and pricing power	Emphasis on ISHC quality/ratings, early tailwind from MA contracts; pricing/RevPOR discipline	MA days now 7.2% vs 5.8% YoY; MA rates 79% > Medicaid and 42% > private; ongoing contract optimization	Strengthening tailwind
Demand/occupancy	Q1: strong SS NOI despite winter headwinds; SHOP move-ins accelerating into spring/summer	Broader-based demand; SHOP spot SS occupancy >87.5% by quarter-end; continued summer strength expected	Improving
Outpatient Medical (OM)	Portfolio curation, non-core OM sales; moderated growth outlook	Near a nadir; slight further dip possible in Q3, improvement from Q4 as hospital tenants stabilize	Stabilizing in 2H
Capital allocation/ATM	De-leveraging and capacity building via ATM; >$300M awarded pipeline (not in guide)	Net Debt/Adj. EBITDA 3.7x; ~$315M+ of awarded deals still not in guidance; continued OM pruning	Accretive growth optionality
Secular supply/demand	2025 guide framed by senior housing tailwinds	“Early innings” of multi-year upcycle; supply lag and demographics support mid-90s occupancy potential over time	Supportive multi‑year

Management Commentary

“We delivered 13.9% total portfolio same-store NOI growth… and expect to capture more of this robust demand to drive double digit… for the remainder of the year.” — CEO Danny Prosky .
“At Trilogy, occupancy climbed to 88.9%… ADR grew 7.8% year over year… we’re seeing growth across both skilled and senior living lines.” — COO Gabe Willhite .
“MA is increasing… 7.2% of resident days vs 5.8% a year ago… MA rate is 79% higher than Medicaid and 42% higher than private pay.” — CFO Brian Peay .
“We raised FY25 NFFO/share guidance to $1.64–$1.68… increase primarily driven by strong organic growth… guidance excludes awarded pipeline.” — CFO Brian Peay .

Q&A Highlights

Medicare Advantage contract dynamics: Improving bargaining position with payors; ongoing mix shift toward higher-rate MA contracts as occupancy rises; some seasonality via PDPM-linked increases Oct 1 .
Occupancy trajectory: SHOP spot SS occupancy >87.5% at Q2-end with continued summer momentum; AHR prioritizes rate and margin over “occupancy at any price” .
OM outlook: Asset managers retaining tenants and executing renewals; management expects slight Q3 dip, recovery beginning Q4 as hospital systems stabilize .
Pipeline and funding mix: >$300M awarded, focus on newer higher-acuity assets under RIDEA; funding via retained earnings, dispositions, tactical ATM, and revolver capacity .
Trilogy margin and revenue management: Centralized, data-driven pricing toolkit; incremental margin strongest in IL, with mix shift toward private pay supporting longer-run margin expansion .

Estimates Context

Q2 2025 vs S&P Global consensus: Revenue $542.5M vs $541.1M (+$1.4M beat); Primary EPS $0.153 vs $0.11 (beat); EBITDA $93.1M vs $89.6M (beat). Beats were driven by ISHC/SHOP strength (occupancy, ADR/RevPOR, quality mix) and expense control; OM remained a modest drag but near expected trough* .
Note: AHR’s operating metric is NFFO/share ($0.42 in Q2), which lacks widely cited S&P consensus; investors should anchor on revenue/EBITDA surprises and the FY25 NFFO raise .