MEDICAL PROPERTIES TRUST INC (MPW)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue was $240.4M, NFFO was $81M ($0.14 per share), and GAAP net loss was ($98M) or ($0.16) per share, reflecting ~$111M impairments primarily tied to the PHP sale and Prospect-related fair value adjustments .
• Versus Wall Street: revenue beat ($240.4M vs $231.9M estimate), EBITDA beat ($230.1M vs $193.8M estimate), while GAAP EPS missed (($0.16) vs $0.016 consensus); the EPS miss is explained by impairments and elevated interest expense after Q1’s $2.5B secured notes .
• Cash rents from new operators ramped to $11.0M in Q2 (96% of scheduled), with ~$17M scheduled for Q3; management reiterated confidence in annualized pro rata cash rent >$1B by Q4 2026 and fully ramped ~$160M annual cash rents for former Steward assets by Oct 2026 .
• Balance sheet flexibility improved: JV completed a €702.5M, 10-year non-amortizing loan at 5.1% fixed; MPW sold a post-acute facility for ~$28M (gain $5M) and later sold two AZ facilities ($50M) under a tenant option .
• Near-term stock catalysts: continued rent ramp, asset sale proceeds and Prospect DIP repayment progress, versus residual bankruptcy/process risks and interest expense headwinds .

What Went Well and What Went Wrong

What Went Well

• Rapid rent ramp from new operators (cash collections $11.0M in Q2; ~$17M scheduled in Q3) and three tenants already paying fully ramped cash rent, supporting visibility to >$1B annualized pro rata cash rent by Q4 2026 .
  • CEO: “rental income from these operators increased significantly quarter-over-quarter… visibility to annualized pro rata cash rent of more than $1 billion by the fourth quarter of 2026” .
• Access to attractive capital: German JV refinancing (€702.5M at 5.1% fixed for 10 years) and earlier $2.5B secured notes validated asset values and investor demand for hospital real estate .
  • CFO: refi “at a low fixed rate of only 5.1%… demonstrates the depth of the global market for well underwritten hospital real estate” .
• Portfolio execution: sold post-acute facility for $28M ($5M gain) and later two AZ facilities for ~$50M; debt metrics disclosed with 58.5% financial leverage and 1.8x adjusted interest coverage, providing clarity on balance sheet trajectory .

What Went Wrong

• GAAP EPS and net income pressure: ($0.16) EPS and ($98M) net loss driven by ~$111M impairments/fair value adjustments and higher interest expense from the Q1 secured notes .
• Rent collection gaps remain: ~3% of July rent uncollected and ~$0.5M related to two facilities (Ohio/Pennsylvania); HSA required a $5M loan in May and is not yet covering full cash rent .
• Ongoing Prospect restructuring risk: outcomes/timing subject to court processes; carrying values for certain Prospect-related assets may vary materially in the 10-Q depending on DIP arrangements resolution .

Financial Results

Guidance Changes

Notes: Management did not provide formal EPS or revenue guidance ranges; disclosures focus on rent ramp schedules, dividend policy, and capital strategy .

Earnings Call Themes & Trends

Management Commentary

• CEO: “rental income from these operators increased significantly quarter-over-quarter… visibility to annualized pro rata cash rent of more than $1 billion by the fourth quarter of 2026” .
• CFO: “the expected further increases in cash rents should more directly drop to the bottom line… [German JV refi] at a low fixed rate of only 5.1%” .
• SVP Operations: “Our transitional portfolio is quickly ramping performance and rent payments as expected… tenants from around the world are delivering consistent performance” .
• Capital strategy tone: executing asset sales and refinancings to “increase financial flexibility… extend our maturity horizon… build equity value” .

Q&A Highlights

• Rent ramp confidence/HSA status: Management affirmed HSA is current on rent and ramping; acknowledged a $5M loan in May due to TSA issues with Steward and that HSA is not yet covering full cash rent .
• Collections gaps: About 3% of July rent not yet collected; ~$0.5M related to Ohio and Sharon, PA facilities with specific operational context .
• Asset sales: ~$100M of pending sales targeted to close by year-end; recent $30M LTAC sale near original basis corroborates asset value resilience .
• Revolver/cash: Elevated quarter-end cash and revolver draws were precautionary and repaid in July; approach remains covenant-aware .
• Regulatory: CMS inpatient-only list changes not expected to impact tenants materially; OBBBA implications likely neutral-to-positive depending on commercial insurance uptake .

Estimates Context

Values retrieved from S&P Global.
Note: EPS miss reflects ~$111M impairments and elevated interest expense from Q1’s $2.5B secured financing; revenue/EBITDA benefited from rent ramp and stable core operations .

Key Takeaways for Investors

• Revenue/EBITDA beat vs consensus despite GAAP EPS loss; impairments and higher interest expense mask underlying operating progress * .
• Cash rent ramp is accelerating and should increasingly offset interest expense, supporting potential sequential improvement in normalized metrics as Q3/Q4 collections rise .
• Capital access and asset value validation (German JV refi at 5.1%; asset sales near basis) support deleveraging optionality and potential cost-of-capital reduction over time .
• Prospect resolution remains a swing factor; subsequent Yale $45M settlement and pending CT/CA transactions could retire DIP balances and de-risk exposure .
• Watch near-term: progress on $100M of asset sales, Q3 rent collections ($17M), any 10-Q changes from DIP resolution, and interest coverage trajectory .
• Trading implications: momentum could hinge on continued rent ramp, asset-sale execution, and clarity on Prospect; setbacks in collections or restructuring timelines would be negative.
• Medium-term thesis: if ramp and capital recycling continue as signaled, normalized FFO and leverage metrics can improve into 2026 alongside >$1B annualized cash rent visibility .

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Bolded beats/misses noted in Estimates Context. All quantitative cells above include exact numbers and source citations; items marked with an asterisk are based on S&P Global consensus and do not carry document citations.