Universal Health Realty Income Trust — Q3 2026 Earnings Summary

Financial Performance:

• Net income for the three months ended September 30, 2026, was $4.9 million ($0.35 per diluted share), compared to $4.0 million ($0.29 per diluted share) in the same period of 2025.
• Net income for the nine months ended September 30, 2026, was $15.9 million ($1.14 per diluted share), compared to $13.3 million ($0.96 per diluted share) in the comparable 2025 period.
• Adjusted net income for the nine-month period ended September 30, 2026, was $15.1 million ($1.09 per diluted share), excluding a $724,000 gain on the sale of land.
• Funds from operations (FFO) for the three months ended September 30, 2026, increased to $12.3 million ($0.88 per diluted share) from $12.2 million ($0.88 per diluted share) in 2025.
• FFO for the nine months ended September 30, 2026, increased to $37.1 million ($2.67 per diluted share) from $35.9 million ($2.59 per diluted share) in 2025.
• Total revenues for the three months ended September 30, 2026, were $25.3 million, compared to $25.3 million in 2025.
• Total revenues for the nine months ended September 30, 2026, were $74.9 million, compared to $74.7 million in 2025.
• Lease revenue from UHS facilities was $8.4 million for the three months ended September 30, 2026, and $25.1 million for the nine months ended September 30, 2026.
• Interest expense, net, decreased to $4.5 million for the three months ended September 30, 2026, from $4.8 million in 2025, and to $13.4 million for the nine months ended September 30, 2026, from $14.2 million in 2025.
• Depreciation and amortization expense was $7.1 million for the three months ended September 30, 2026, and $21.0 million for the nine months ended September 30, 2026.
• Cash and cash equivalents were $6.5 million as of September 30, 2026.
• Total assets were $573.0 million as of September 30, 2026, compared to $564.9 million as of December 31, 2025.
• Total liabilities were $433.5 million as of September 30, 2026, compared to $412.5 million as of December 31, 2025.
• Total equity was $139.5 million as of September 30, 2026, compared to $152.4 million as of December 31, 2025.

Guidance and Future Outlook:

• The company expects to record a gain of approximately $1.90 million in the fourth quarter of 2026 related to the sale of a Chicago land parcel.
• Construction of the Miller Medical Plaza is expected to be completed in December 2026.
• The credit agreement is scheduled to mature on September 30, 2028, with an option to extend the maturity date for up to two additional six-month periods.

Business Segments and Product Lines:

• The company holds investments or commitments in seventy-seven properties located in twenty-one states, including acute care hospitals, behavioral health care hospitals, specialty facilities, medical/office buildings, free-standing emergency departments, and childcare centers.
• In October 2025, the company entered into a ground lease with a UHS subsidiary to develop the 80,000 square foot Miller Medical Plaza in Palm Beach Gardens, Florida, with an estimated cost of $34 million.
• A UHS subsidiary has executed a 10-year master flex lease agreement for approximately 75% of the rentable square feet of the Miller Medical Plaza, commencing upon completion.
• In June 2026, the company sold a parcel of land in Chicago, Illinois, generating a gain of approximately $724,000.
• In October 2026, the company sold a second parcel of land in Chicago, Illinois, for cash proceeds of $1.96 million, representing approximately 42% of the remaining acreage owned as of September 30, 2026.

Market and Competitive Landscape:

• The company operates within the healthcare and human-service real estate sector, with a focus on facilities owned or operated by UHS subsidiaries and non-related parties.
• Lease revenue from non-related parties was $14.9 million for the three months ended September 30, 2026, and $43.6 million for the nine months ended September 30, 2026.

Risks and Challenges:

• Future results may be impacted by potential significant reductions in federal funding for state Medicaid programs or changes affecting Medicaid payments.
• Tenant operations could be affected by decreases in staffing availability and increased wage expenses due to shortages of clinical staff and support personnel.
• Government and administrative regulations of the healthcare industry may impact future operations.
• Declining patient volumes and unfavorable changes in payer mix could result from deteriorating macroeconomic conditions, including increases in uninsured and underinsured patients.
• Cost increases and disruptions related to supplies and building materials may occur due to changes in foreign trade laws, tariffs, or taxes.
• Increases in interest rates have substantially increased borrowing costs and reduced the ability to access capital markets on favorable terms; further increases could adversely affect the ability to carry out the company's strategy.
• Forward-looking statements are subject to risks detailed in the company's Form 10-K and Form 10-Q filings.

Management Commentary and Tone:

• The increase in net income for the third quarter of 2026 compared to 2025 was primarily driven by a nonrecurring depreciation expense recorded in the third quarter of 2025 and a decrease in interest expense due to a lower average effective borrowing rate.
• Management noted that the decrease in interest expense was partially offset by an increase in average borrowings outstanding pursuant to the credit agreement.
• A one-time settlement and release agreement executed in the third quarter of 2025 in connection with a medical office building negatively impacted the 2025 results, contributing to the year-over-year increase in 2026.

Other Key Points:

• A third-quarter dividend of $0.75 per share ($10.4 million aggregate) was declared on September 8, 2026, and paid on September 30, 2026.
• As of September 30, 2026, the company had $97.3 million of available borrowing capacity under its $475 million credit agreement, with $377.7 million in outstanding borrowings.
• The company reported a $724,000 gain on the sale of land in the second quarter of 2026, which was excluded from adjusted net income and FFO calculations for the nine-month period.
• The company utilizes Non-GAAP measures including Adjusted Net Income and Funds from Operations (FFO) to measure operating performance, excluding non-recurring items such as gains on transactions.