• Same Store NOI Growth (Q4 2024): 21.6% year-over-year.
• Full Year Same Store NOI Growth (2024): 17.7% compared to 2023.
• Trilogy Segment Same Store NOI Growth (Q4 2024): 28% year-over-year.
• Trilogy Segment Full Year Same Store NOI Growth (2024): 23.8%.
• Shop Segment Same Store NOI Growth (Q4 2024): Over 65% year-over-year.
• Shop Segment Full Year Same Store NOI Growth (2024): 52.8%.
• Normalized Funds From Operations (NFFO) Per Share (Q4 2024): $0.40 per diluted share.
• Full Year NFFO Per Share (2024): $1.41.
• Net Debt to Adjusted EBITDA (End of 2024): 4.3 times, improved from 8.5 times at the end of 2023.
• External Growth Investment (2024): Over $650 million in managed long-term care segments.
• Capital Raised Through ATM Program (Q4 2024): Approximately $121 million at $28.05 per share.
• 2025 NFFO Per Share Guidance: $1.56 to $1.60 per fully diluted share.
• 2025 Total Portfolio NOI Growth Guidance: 7% to 10%.
• 2025 Trilogy Segment NOI Growth Guidance: 10% to 12%.
• 2025 Shop Segment NOI Growth Guidance: 18% to 22%.

• Warning! GuruFocus has detected 6 Warning Sign with AHR.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Healthcare REIT Inc (NYSE:AHR) reported strong same-store NOI growth of 21.6% year-over-year in Q4 2024, with full-year growth at 17.7%.
• The Trilogy segment, the largest in AHR's portfolio, showed significant growth, contributing to 71% of total NOI by the end of Q4 2024.
• AHR's net debt to adjusted EBITDA improved significantly from 8.5 times at the end of 2023 to 4.3 times at the end of 2024, providing financial flexibility.
• The company invested over $650 million in external growth in 2024 and plans further investments in 2025, including new acquisitions and development projects.
• AHR's guidance for 2025 indicates expected double-digit NFFO per share growth, reflecting confidence in continued strong performance.

Negative Points

• Potential policy changes in the healthcare sector, particularly related to Medicaid, pose uncertainty and could impact future operations.
• The outpatient medical segment faces headwinds from expected tenant move-outs, which could affect occupancy and NOI growth.
• Seasonal factors such as higher utility costs and fewer days in Q1 are expected to impact NOI growth sequentially.
• The company anticipates modest sequential headwinds in Trilogy NOI in Q1 2025 due to compensation-related expenses and seasonal occupancy changes.
• Despite strong growth, the company acknowledges that the pace of occupancy growth in the shop segment may not match the 600 basis points increase seen in 2024.

Q & A Highlights

Q: What trends are you seeing in January and February, and how do they relate to the deceleration in same-store NOI guidance? A: Danny Prosky, President and CEO, explained that while Q1 2025 will be higher than Q1 2024, several factors such as employer FICA resets and higher winter utilities affect early-year performance. Historically, Q1 tends to be flat over Q4, with growth resuming throughout the year. Strong occupancy growth in skilled nursing was noted, attributed to the flu season, while shop occupancy slightly dropped. Overall, the company is pleased with the start of the year.

Q: Can you provide insights into the acquisition pipeline and the volume of deals being considered? A: Stefan Oh, Executive Vice President - Acquisitions, stated that the pipeline is robust and more significant than the previous year. The company is actively evaluating new opportunities, working closely with operators to identify the best fits for the portfolio.

Q: Regarding Trilogy's occupancy, when can you start pushing rates and seeing margin expansion? A: Danny Prosky noted that current occupancy levels are above pre-COVID levels, allowing for rate increases. The AL component is in the high 80s, and skilled nursing is around 90%. Trilogy's model focuses on short-term stays, so maintaining some bed availability is crucial for higher-paying Medicare patients.

Q: How are you addressing potential Medicaid policy changes, particularly in Trilogy? A: Danny Prosky highlighted that Trilogy's Medicaid exposure is about 21% and has been decreasing. While predicting policy changes is difficult, Trilogy can pivot away from Medicaid if necessary, focusing more on AL and Medicare. Historically, attempts to cut skilled nursing reimbursements have been reversed due to negative impacts.

Q: What is the outlook for Trilogy's development and expansion projects in 2025? A: Danny Prosky mentioned that the company plans to start approximately $140 million in new Trilogy development projects in 2025, including new campuses and expansions. The typical annual number of new campus starts is expected to be 2 to 3, with an estimated annual development spend of around $150 million.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.