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American Healthcare REIT, Inc. (AHTR)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 delivered solid operational momentum driven by RIDEA-operated assets: total revenues were $499.53M (+10.5% YoY) and GAAP net loss per share improved to $(0.04) from $(0.39) YoY . Same-Store NOI growth was 13.0%, led by SHOP (+33.5%) and ISHC (+19.9%) .
  • Balance sheet materially strengthened post-IPO: ~$721.5M of higher-cost debt repaid; net-debt-to-Adjusted EBITDA fell to 6.4x, with consolidated liquidity of ~$914.5M at quarter-end .
  • Guidance unchanged vs March: FY 2024 NAREIT FFO per share $1.13–$1.19; NFFO per share $1.18–$1.24; total portfolio SS NOI growth 5–7% with segment ranges intact .
  • Strategic actions: acquired 14-property Oregon senior housing portfolio (~$94.5M assumed debt) and disposed of ~$15.6M of non-core properties; Oregon portfolio is ahead of initial expectations .
  • Potential stock catalysts: continued occupancy and RevPOR gains in SHOP/ISHC, positive SS NOI trajectory, further deleveraging and asset recycling .

What Went Well and What Went Wrong

What Went Well

  • Strong Same-Store NOI growth, especially in RIDEA assets: SHOP +33.5% and ISHC +19.9% YoY for Q1; total portfolio +13.0% .
    Quote: “The year is off to a solid start, as we captured outsized growth within our RIDEA-operated assets due to the supply-demand imbalance present in the senior housing industry.” — Danny Prosky, CEO .
  • Oregon portfolio outperforming: acquired 14-property portfolio managed by Compass Senior Living; “properties have meaningfully improved bottom-line performance… trending ahead of our initial expectations,” said COO Gabe Willhite .
  • Balance sheet de-risking: $772.8M gross equity raised; ~$721.5M debt repaid at ~7.5% average rate; credit facility amended to $1.15B capacity; net-debt-to-Adjusted EBITDA down to 6.4x .

What Went Wrong

  • Outpatient Medical (OM) softness: same-store OM NOI grew just ~1.0% YoY; ending occupancy declined to 88.1% (−155 bps YoY) as revenue per square foot moderated; some impact from dispositions .
  • Expense pressures: property operating expenses rose in ISHC and SHOP tied to higher occupancies, labor costs and ancillary expansion, tempering margin expansion despite growth .
  • Business acquisition costs and debt extinguishment charges: $2.8M acquisition expenses and $1.28M loss on debt extinguishments weighed on GAAP results in Q1 .

Financial Results

MetricQ1 2023Q4 2023Q1 2024
Revenue ($USD Millions)$452.23 $482.58 $499.53
GAAP Diluted EPS ($)$(0.39) $(0.42) $(0.04)
NAREIT FFO per share ($)$0.18 $0.13 $0.30
Normalized FFO per share ($)$0.31 $0.38 $0.30

Segment NOI ($USD Thousands)

Segment NOIQ1 2023Q1 2024
ISHC$33,409 $41,980
OM$23,075 $20,978
SHOP$5,075 $6,509
Triple-Net Leased$5,326 $12,710

KPIs (Occupancy and Cash NOI Margin %)

KPIQ1 2023Q1 2024
ISHC Average Occupancy84.2% 85.6%
ISHC Cash NOI Margin %11.9% 12.9%
OM Ending Occupancy89.7% 88.1%
OM Cash NOI Margin %61.9% 62.2%
SHOP Average Occupancy78.6% 85.7%
SHOP Cash NOI Margin %10.5% 11.0%
Triple-Net Avg Operator Occupancy88.3% 91.0%
Triple-Net Cash NOI Margin %94.2% 95.0%

Drivers and notes:

  • ISHC/SHOP revenue growth driven by occupancy and rate increases; OM revenue decline impacted by asset sales .
  • Interest expense decreased YoY with debt paydowns and favorable derivative valuation change .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
NAREIT FFO per shareFY 2024$1.13–$1.19 $1.13–$1.19 Maintained
Normalized FFO per shareFY 2024$1.18–$1.24 $1.18–$1.24 Maintained
Total Portfolio SS NOI GrowthFY 20245.0%–7.0% 5.0%–7.0% Maintained
ISHC SS NOIFY 20248.0%–10.0% 8.0%–10.0% Maintained
OM SS NOIFY 2024(0.5)%–0.0% (0.5)%–0.0% Maintained
SHOP SS NOIFY 202425.0%–30.0% 25.0%–30.0% Maintained
Triple-Net SS NOIFY 20241.0%–3.0% 1.0%–3.0% Maintained
DividendQ1 2024—$0.25 per share declared Cash dividend reaffirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023 and Q3 2023)Current Period (Q1 2024)Trend
Senior housing supply-demand, occupancy recoveryOccupancy surpassing pre-pandemic levels; SS NOI growth in RIDEA assets CEO cites “supply-demand imbalance” driving outsized growth; continued occupancy gains expected Improving
Balance sheet deleveragingPlanned leverage reduction with ~$721M debt paydowns post-IPO Net-debt-to-Adjusted EBITDA reduced to 6.4x; extended and upsized credit facility to $1.15B Improving
OM portfolio performanceOM same-store stability; revenue per square foot resilient Ending occupancy down to 88.1% amid dispositions; same-store NOI +1.0% YoY Slightly Negative
Oregon portfolio (Compass Senior Living)—Early performance ahead of expectations per COO; acquired 14 properties via assumed debt Positive
Trilogy ownership/controlOption to acquire remaining 24% by 2025 Ownership at 76% as of April 15, 2024 through redemptions; option remains Increasing Control

Management Commentary

  • “Our main focus is on delivering strong operating performance… we captured outsized growth within our RIDEA-operated assets due to the supply-demand imbalance present in the senior housing industry.” — Danny Prosky, President & CEO .
  • “Our hands-on active asset management approach is proving its merits… Oregon portfolio… trending ahead of our initial expectations.” — Gabe Willhite, COO .
  • “Utilizing proceeds from our public offering… bringing our net-debt-to-Adjusted EBITDA ratio down to 6.4x… we expect organic earnings growth to further improve leverage ratios.” — Brian Peay, CFO .

Q&A Highlights

  • The full Q1 2024 earnings call transcript could not be retrieved via our document tool due to a database inconsistency; the webcast replay link is available on the company’s IR site .
  • Public transcript access (third-party) exists at Seeking Alpha but is outside our document repository .
  • As a result, detailed Q&A themes are not provided here.

Estimates Context

  • S&P Global (Capital IQ) consensus estimates were unavailable for ticker AHTR in our SPGI mapping at the time of retrieval (system mapping error).
  • Third-party reported outcomes indicate Q1 2024 EPS of approximately −$0.03 vs consensus and revenue of ~$499.53M vs consensus, both better than expectations, per Seeking Alpha’s summary .
  • Note: We anchor comparisons on S&P Global when available; in this case, S&P Global consensus was unavailable.

Actual vs Consensus (S&P Global unavailable)

MetricActual Q1 2024S&P Global ConsensusSurprise
Revenue ($USD Millions)$499.53 Unavailable—
GAAP Diluted EPS ($)$(0.04) Unavailable—

Key Takeaways for Investors

  • RIDEA engine is working: strong SS NOI growth in SHOP (+33.5%) and ISHC (+19.9%) reflects both occupancy and pricing power tailwinds, supporting FY 2024 SS NOI guidance .
  • Balance sheet reset lowers risk: $772.8M equity raise and ~$721.5M debt paydown reduce interest burden and maturities; liquidity ~$914.5M and net-debt-to-Adjusted EBITDA at 6.4x create flexibility .
  • Portfolio optimization continues: Oregon acquisition adds scale to SHOP; non-core dispositions ($15.6M in Q1) support capital recycling and focus on higher-return assets .
  • OM headwinds manageable: OM occupancy moderation and revenue softness largely tied to dispositions; same-store margins remain >62% and long WALT provides stability .
  • Dividend continuity: $0.25 cash distribution declared for Q1 2024 aligns with normalized FFO trajectory and deleveraging progress .
  • Near-term focus: execute on SS NOI targets (particularly SHOP/ISHC), manage labor and controllable expenses, and continue to improve leverage and coverage ratios .
  • Medium-term thesis: demographic demand and limited new supply in senior housing underpin occupancy and RevPOR growth; rising control in Trilogy and operator alignment enhance operating leverage .