National Health Investors (NHI) Q2 2024 earnings summary

Executive summary

• Second quarter 2024 results exceeded forecasts, with net income per diluted share at $0.81, down from $0.92 year-over-year, and six-month net income per share at $1.52, down from $1.71; net income for Q2 was $35.2 million, down 11.4% from Q2 2023.

• Rental income rose 7.9% to $65.8 million in Q2 2024, driven by pandemic-related rent deferral repayments and new investments; SHOP segment revenues and occupancy increased, with resident fees up 13.5% and occupancy reaching 87%.

• Year-to-date, $56.6 million in investments closed at an average initial yield of 8.4%, with a robust pipeline of over $1.8 billion in opportunities and $155.4 million in signed LOIs expected to close this year.

• No unexpected rent concessions occurred, and SHOP occupancy and revenue continued to grow; interest income from mortgages and notes grew 13% in Q2 2024.

• Gains on sales of real estate fell sharply to $1.5 million in Q2 2024 from $11.4 million in Q2 2023.

Financial highlights

• Normalized FFO per share and total dollar FAD increased 11.4% and 16.1% year-over-year, respectively, compared to Q2 2023; NAREIT and normalized FFO per diluted share rose to $1.18 for Q2 2024 from $1.05 and $1.06, respectively.

• FAD for the quarter increased 16.1% to $51.8 million year-over-year and 1.6% sequentially; normalized FAD for Q2 2024 was $51.8 million, up from $44.6 million year-over-year.

• Q2 2024 rental income: $65.8 million (+7.9%); six-month rental income: $127.9 million (+1.3%).

• Net income per diluted share for Q2 2024 was $0.81, up 14.1% sequentially but down from $0.92 in Q2 2023; six-month net income attributable to common stockholders: $66.1 million ($1.52/share).

• SHOP NOI increased 39.9% year-over-year to $3 million, with resident fees up 13.5% and occupancy rising to 87% from 75.5%.

Outlook and guidance

• 2024 guidance raised: midpoint normalized FFO per share growth of 4.8% and FAD growth of 7% over 2023; NAREIT FFO per diluted share guidance raised to $4.50–$4.54, normalized FFO to $4.52–$4.56, and normalized FAD to $200.1–$201.8 million.

• Updated guidance reflects improved Q2 revenues, recent transactions, and maintains SHOP NOI growth range of 25%-30% year-over-year.

• Guidance assumes continued rent concessions, asset dispositions, loan repayments, and continued collection of deferred rents; does not include impacts from the current investment pipeline or signed LOIs.

• Management expects cash flows from operations to be adequate to fund dividends at the current rate for full year 2024.