Diversified Healthcare Trust (DHC) Q3 2024 earnings summary

Executive summary

• Q3 2024 results reflect a diversified $7.2 billion healthcare real estate portfolio with 368 properties in 36 states and D.C., including over 27,000 senior living units and 8.2 million sq. ft. of medical office/life science space, managed by The RMR Group.

• SHOP segment NOI grew 32.6% year-over-year to $27.4 million, with occupancy up to 79.4% and average monthly rates up 5.4%, but sequential progress was limited by higher costs and slow occupancy gains.

• Net loss for Q3 2024 was $98.7 million, reflecting higher impairment charges and increased expenses, despite revenue growth to $373.6 million, up 4.8% year-over-year.

• Strategic initiatives advanced, including portfolio repositioning, transition of 13 communities, and expanded asset sales under agreements or LOIs for up to 28 properties totaling $348.1 million.

• Conference call announced for November 5, 2024, to discuss Q3 2024 financial results.

Financial highlights

• Q3 2024 total revenues were $373.6 million (up 4.8% year-over-year); normalized FFO was $4.0 million ($0.02 per share); net loss per share was $(0.41).

• Adjusted EBITDAre increased 13.6% year-over-year to $66.8 million.

• Same property cash basis NOI was $65.8 million, up 16.1% year-over-year, but down 1.5% sequentially.

• SHOP segment Q3 2024 revenues were $312.0 million (up 6.4% year-over-year); NOI margin up 240 bps year-over-year.

• Cash and cash equivalents at September 30, 2024, were $256.5 million.

Outlook and guidance

• Full-year SHOP NOI guidance lowered to $102-$107 million due to Q3 underperformance and hurricane-related costs; year-end SHOP occupancy expected just below 80%.

• Expanded disposition program with $348.1 million in pending sales, with proceeds to partially redeem senior secured notes due 2026.

• Sufficient liquidity expected to meet obligations and fund operations for at least the next 12 months.