On November 7, 2023, National Health Investors Inc (NHI, Financial) released its earnings report for the third quarter of 2023, revealing a mixed financial performance with some metrics showing strength and others reflecting challenges. The company reported a decrease in net income attributable to common stockholders per diluted common share to $0.68, compared to $0.78 in the same period of the previous year. However, the nine-month performance showed an increase to $2.39 from $1.43 year-over-year.
Financial Highlights
NHI's NAREIT Funds From Operations (FFO) per diluted common share for the quarter increased to $1.08 from $1.04 year-over-year, and $3.30 for the nine months ended September 30, 2023, compared to $2.81 in the prior year. Normalized FFO per diluted common share for the quarter remained stable at $1.08, but experienced a decrease for the nine-month period to $3.24 from $3.43 year-over-year. Normalized Funds Available for Distribution (FAD) for the quarter saw a slight increase to $48.2 million from $47.4 million in the prior year, while the nine-month performance showed a decrease to $140.5 million from $156.1 million.
Operational and Portfolio Activity
Rental income recognized from the company's tenants increased by $2.9 million, primarily due to an increase in pandemic-related rent repayments and new investments. Interest income and other was approximately $0.6 million higher, primarily due to new and existing loan fundings. However, Net Operating Income (NOI) from the Senior Housing Operating Portfolio (SHOP) segment decreased by $0.5 million compared to the same period in the prior year. Interest expense also increased by approximately $3.7 million, primarily due to increased interest rates and borrowings.
Guidance and Outlook
NHI revised its 2023 annual guidance range for Normalized FFO per share to $4.28 - $4.31 from $4.31 - $4.35 and for Normalized FAD to a range of $186.0 million - $187.6 million from $185.0 million - $186.8 million. This revision reflects increased expectations for cash lease revenue and interest income, lower general, administrative, and legal expenses, and lower franchise, excise, and other taxes.
Balance Sheet and Liquidity
As of September 30, 2023, NHI had $1.1 billion in net debt, including $205.0 million outstanding on its $700.0 million revolving credit facility. The company maintains a strong financial profile with net debt to adjusted EBITDA at 4.4x, which is within the company's target range.
Portfolio Occupancy and Dispositions
NHI reported average portfolio occupancy for SLC, Bickford, and SHOP, showing varying levels of occupancy with Bickford Same-Store at 84.8% in September 2023. The company also engaged in several property dispositions, with gains on sales of real estate netting $0.7 million for the quarter.
Eric Mendelsohn, NHI President and CEO, commented on the results, stating,
Our third quarter results exceeded our expectations driven by strong rent collections, record deferral repayments of $2.3 million, discrete payments of $1.0 million from two cash-basis accounting tenants, and no unexpected rent concessions."He also noted the senior housing industry's recovery and expressed confidence in the industry's positioning for above-average growth in the coming years.
For more detailed information on National Health Investors Inc's third quarter 2023 results, please visit www.nhireit.com.
Explore the complete 8-K earnings release (here) from National Health Investors Inc for further details.
