American Healthcare REIT, Inc. ((AHR)) has held its Q4 earnings call. Read on for the main highlights of the call.
American Healthcare REIT’s recent earnings call painted a picture of robust performance and strategic growth. The company reported significant achievements in 2024, particularly in the Trilogy segment, and expressed a positive outlook for 2025. Despite facing challenges in the outpatient medical segment and potential policy changes in healthcare, the overall sentiment was optimistic, highlighting the company’s strong position for future growth.
Strong Same-Store NOI Growth
American Healthcare REIT reported impressive same-store net operating income (NOI) growth, with a 21.6% increase year over year in the fourth quarter and a 17.7% rise for the full year 2024 compared to 2023. This growth underscores the company’s effective management and operational strategies.
Trilogy Segment Performance
The Trilogy segment stood out with a remarkable 28% same-store NOI growth year over year in Q4 2024 and 23.8% for the entire year. This segment’s success is attributed to its strong health outcomes and financial results, positioning it as a key driver of the company’s overall performance.
Significant Reduction in Leverage
In a strategic move to enhance financial flexibility, American Healthcare REIT significantly reduced its net debt to adjusted EBITDA from 8.5 times at the end of 2023 to 4.3 times by the end of 2024. This reduction in leverage strengthens the company’s balance sheet and supports future growth initiatives.
Successful Capital Allocation Strategy
The company invested over $650 million in external growth within managed long-term care segments in 2024. It also announced new investments for 2025, including two new shop assets and several Trilogy development projects, demonstrating a commitment to strategic capital allocation.
Positive Outlook for 2025
Guidance for 2025 is optimistic, with expectations of 7% to 10% same-store NOI growth and normalized funds from operations (NFFO) per share projected to rise to $1.56 to $1.60. The company anticipates double-digit NFFO per share growth, driven by strong performance in the Trilogy and shop segments.
Outpatient Medical Segment Challenges
The outpatient medical segment faces challenges, with guidance reflecting headwinds from expected tenant move-outs. This is expected to result in same-store NOI growth declines of 1.5% to 0.5%, highlighting a key area of concern for the company.
Q1 2025 Sequential Headwinds
The company anticipates modest sequential headwinds to Trilogy NOI in Q1 2025 due to compensation-related expenses and seasonality factors, such as fewer days in the first quarter. These factors may temporarily impact performance but are not expected to derail overall growth.
Potential Policy Changes Impact
Concerns were raised regarding potential policy changes in the healthcare sector, particularly related to Medicaid. These changes could affect future operations and reimbursement rates, posing a potential risk to the company’s financial outlook.
Forward-Looking Guidance
Looking ahead, American Healthcare REIT has set ambitious targets for 2025, with anticipated double-digit growth in key financial metrics. The company plans to continue its strategic investments, leveraging favorable market conditions and a strengthened capital structure to seize future opportunities.
In summary, American Healthcare REIT’s earnings call showcased a strong performance in 2024 and an optimistic outlook for 2025. While challenges exist, particularly in the outpatient medical segment and potential policy changes, the company’s strategic investments and reduced leverage position it well for continued growth. Investors can look forward to a promising year ahead, driven by robust segments like Trilogy and strategic capital allocation.