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NH

NATIONAL HEALTH INVESTORS INC (NHI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was stronger than expected with higher rental income and SHOP performance; diluted EPS was $0.79, NAREIT FFO/share $1.19, Normalized FFO/share $1.22, and Normalized FAD $56.0M .
  • NHI raised full-year 2025 Normalized FFO guidance to $4.78–$4.82 and Normalized FAD to $227.9–$229.8M, while lowering NAREIT FFO to $4.46–$4.50; the Board also approved a dividend increase to $0.92/share (first since 2021) .
  • The company transitioned seven properties from leases to SHOP effective August 1, adding ~$8.8M annualized SHOP NOI with expected double-digit growth in 2026; liquidity is strong at ~$760M with net debt/adjusted EBITDA at 3.9x .
  • Versus S&P Global consensus, Q2 revenue and EPS were beats; improved visibility and record SHOP NOI margin (26.9%) highlight a durable growth narrative and catalysts into H2 (acquisitions, SHOP scaling, dividend increase) .

What Went Well and What Went Wrong

What Went Well

  • Record SHOP metrics: SHOP NOI +29.4% YoY to $3.8M; RevPOR +3.7% YoY; SHOP NOI margin reached a record 26.9% since SHOP’s formation. “RevPAR growth of 3.7% and NOI margin at 26.9% are both record results…” .
  • Guidance and dividend actions: Normalized FFO raised again (midpoint +$0.09), Normalized FAD raised, and dividend increased to $0.92/share, signaling confidence and coverage strength .
  • External growth momentum: $63.5M memory care acquisition, $28.0M construction loan at 9%, and ~$129.9M signed LOIs (avg 8% yield) with a broader ~$343.0M pipeline focused on senior housing/S HOP .

What Went Wrong

  • Lowered NAREIT FFO guidance to $4.46–$4.50 (from $4.64–$4.70), reflecting conversion and accounting impacts (straight-line rent write-off) even as Normalized FFO rose .
  • SHOP occupancy softness post-Q2 due to localized leadership changes and abnormal move-outs; management expects normalization but implied slower H2 growth within a 13–16% same-store SHOP NOI range .
  • Higher operating costs: Legal expenses +$0.9M and G&A +$1.3M YoY tied to SHOP transition and compensation; proxy-related costs affected reported results .

Financial Results

Reported Results vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$85.754 $89.296 $90.662
Diluted EPS ($USD)$0.95 $0.74 $0.79
NAREIT FFO per Diluted Share ($USD)$1.24 $1.14 $1.19
Normalized FFO per Diluted Share ($USD)$1.12 $1.15 $1.22
Normalized FAD ($USD Millions)$52.073 $56.001 $56.000
SHOP NOI ($USD Millions)$3.250 $3.086 $3.821

Actual vs S&P Global Consensus

Estimates marked with * are values retrieved from S&P Global.

MetricQ4 2024Q1 2025Q2 2025
Revenue Actual ($USD Millions)$85.754 $89.296 $90.662
Revenue Consensus* ($USD Millions)$81.130$84.039$86.162
Delta vs Consensus ($USD Millions)+$4.62+$5.26+$4.50
Diluted EPS Actual ($USD)$0.95 $0.74 $0.79
Primary EPS Consensus Mean* ($USD)$0.749$0.736$0.757
Delta vs Consensus ($USD)+$0.20+$0.01+$0.03
EBITDA Actual* ($USD Millions)$66.231$67.461$72.806
EBITDA Consensus* ($USD Millions)$66.539$68.120$71.086
Delta vs Consensus ($USD Millions)-$0.31-$0.66+$1.72

S&P Global estimates detail: EPS estimate count Q2 2025: 5; Revenue estimate count Q2 2025: 6.*

Segment NOI Breakdown

Segment NOI ($USD Millions)Q4 2024Q1 2025Q2 2025
Real Estate Investments$68.754 $72.428 $73.496
SHOP$3.250 $3.086 $3.821
Non-Segment/Corporate$0.150 $0.042 $0.035
Total NOI$72.154 $75.556 $77.352

KPIs (SHOP)

KPIQ4 2024Q1 2025Q2 2025
SHOP Avg Occupancy90.0% (Dec-24) 88.9% (Mar-25) >89% for last 3 quarters (management)
RevPOR YoY Growth——+3.7% YoY; +2.1% QoQ
SHOP NOI Margin——26.9% (record)

Guidance Changes

MetricPeriodPrevious Guidance (May 2025)Current Guidance (Aug 2025)Change
NAREIT FFO per diluted shareFY 2025$4.64 – $4.70 $4.46 – $4.50 Lowered
Normalized FFO per diluted shareFY 2025$4.68 – $4.73 $4.78 – $4.82 Raised
Normalized FAD ($USD Millions)FY 2025$223.8 – $226.4 $227.9 – $229.8 Raised
Same-store SHOP NOI GrowthFY 202512% – 15% 13% – 16% Raised
SHOP Conversion NOI ($USD Millions)FY 2025—$3.6 – $3.7 New
Dividend per shareFY 2025$0.90 (prior quarterly)$0.92 declared; record 9/30, payable 10/31 Raised
Straight-line Rent Write-off ($USD Millions)Q3 2025—~$12.1 write-off expected (Discovery leases termination) New
Discovery Lease Revenues ($USD Millions)Q3 2025—~$3.3 recognized (post-closing reconciliations) New

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
SHOP Growth & MarginSHOP NOI +12.5% YoY; pipeline building Seasonality muted SHOP NOI growth; target 12–15% Record 26.9% margin; RevPOR +3.7% YoY; 13–16% same-store growth Strengthening
External Growth/LOIs$152.3M signed LOIs; active pipeline $174.9M YTD investments; evaluating ~$264M pipeline ~$129.9M signed LOIs (avg 8%) and ~$343M pipeline Expanding
Balance Sheet & LeverageNet debt/adj. EBITDA low end of 4–5x Low leverage; extended term loan Net debt/adj. EBITDA 3.9x; liquidity ~$760M Improving
Discovery Tenant/TransitionRent reset contemplated Amended master lease; right to pursue new manager Transitioned 7 properties to SHOP; Q3 write-off ~$12.1M Transition executed
Deferred Rent CollectionsRepayments contributed to results +$2.0M deferral repayments Continued collections; Bickford deferrals $1.2M in Q2, $10.4M outstanding Ongoing positive
Governance/NHC Lease——Board refresh; special committee engaged on NHC renegotiation; NHC coverage 4.16x Constructive progress

Management Commentary

  • “We followed a strong start to the year with an even stronger quarter… Due to the outperformance and good visibility, we're raising our 2025 guidance for the second time this year.” — Eric Mendelsohn, CEO .
  • “RevPAR growth of 3.7% and NOI margin at 26.9% are both record results since SHOP's formation.” — Eric Mendelsohn, CEO .
  • “Our net debt to adjusted EBITDA at 3.9 times… and we have available liquidity of approximately $760,000,000.” — Eric Mendelsohn, CEO .
  • “Our Board… declared a $0.92 per share dividend… and we adjusted our full year 2025 guidance… Normalized FFO at the midpoint is $4.8 or an increase of 8.1%.” — John Spaid, CFO .

Q&A Highlights

  • Pipeline timing: Closings delayed by conversion focus, but robust LOIs expected to close soon; management views delays as timing, not disruption .
  • Funding approach: Aim for leverage-neutral, but pivoted to more equity when cost of equity approximated long-term debt; flexibility remains .
  • Discovery relationship: Still an ongoing partner with 10 SHOP buildings; transitioned smaller/secondary-market assets to a new operator better suited to drive growth .
  • SHOP occupancy softness: Attributed to local leadership transitions and abnormal move-outs; flows of move-ins stable; expected normalization .
  • NHC renegotiation: Special Board Committee actively engaged; enterprise coverage improved to ~4.16x; potential portfolio culling and higher rent on remaining assets contemplated .

Estimates Context

  • Q2 2025 results beat consensus: Revenue $90.662M vs $86.162M estimate (beat ~$$4.50M); diluted EPS $0.79 vs $0.757 estimate (beat ~$$0.03). EBITDA modestly above consensus (actual* $72.806M vs estimate* $71.086M) — a supportive backdrop for guidance raises *.
  • Estimate counts: EPS (5), Revenue (6) in Q2 2025.*
  • Following raised Normalized FFO/FAD, and the SHOP transition (normalized adjustments), Street models likely need upward revisions to Normalized FFO/FAD; GAAP/NAREIT FFO may see transient Q3 volatility from the straight-line lease write-off .
    Estimates marked with * are values retrieved from S&P Global.

Key Takeaways for Investors

  • The beat on revenue and EPS, combined with raised Normalized FFO/FAD and a dividend increase, strengthens near-term sentiment; watch for additional SHOP acquisitions as incremental catalysts .
  • SHOP operating momentum is tangible (record margin, RevPOR growth); short-term occupancy softness appears idiosyncratic and being addressed, but it tempers H2 growth pacing in guidance .
  • Expect Q3 reported NAREIT FFO impact from ~$12.1M straight-line rent write-off tied to Discovery lease termination; normalized metrics adjust these effects, keeping core performance intact .
  • Balance sheet optionality is high (3.9x net debt/EBITDA; ~$760M liquidity), enabling accretive external growth while maintaining flexibility on funding mix .
  • Tenant fundamentals: Bickford coverage/occupancy improving; continued deferral repayments provide base rent capture opportunity and reduce variability over time .
  • Governance uptick and active engagement on NHC renegotiation (with strong enterprise coverage) could unlock value through portfolio optimization and rent resets .
  • Trading lens: Near-term tailwinds from dividend raise and guidance increase; monitor execution on signed LOIs/SHOP scaling and Q3 accounting impacts to NAREIT FFO to avoid misinterpretation of underlying strength .