Summary of DHC Q3 2025 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $388.7 million, up 4% year-over-year.

Adjusted EBITDAre: $62.9 million.

Normalized Funds from Operations (FFO): $9.7 million, or $0.04 per share.

Same-Property Cash Basis NOI: $62.6 million, a 70 basis point increase year-over-year, but down 9.5% sequentially.

SHOP Revenue Growth: 6.6% year-over-year.

SHOP NOI: $29.6 million, a 7.8% increase year-over-year, but sequentially affected by higher costs.

SHOP Occupancy: Increased to 81.5%, a 210 basis point rise year-over-year.

2Strategic Updates and Business Highlights

Transition of 116 AlerisLife-managed communities to new operators is underway, with 85 communities transitioned as of the call.

Elevated labor costs due to the transition resulted in a temporary decline in NOI, with an additional $5.1 million in compensation expenses.

New operating agreements with a 10-year term include performance-based incentives to align operator interests with DHC’s objectives.

DHC completed approximately 86,000 square feet of leasing in its Medical Office and Life Science portfolio at rents 9% above prior levels.

Significant asset sales: 44 properties sold for $396 million year-to-date, with 38 more under agreements for $237 million.

3Forward Guidance and Outlook

Full-year SHOP NOI guidance maintained at $132 million to $142 million.

Anticipated improvements in adjusted EBITDAre for 2025, with a range of $275 million to $285 million.

Expectation to repay January 2026 bonds as early as year-end 2025, with no debt maturities until 2028.

4Bad News, Challenges, or Points of Concern

Increased operational costs due to the transition from AlerisLife, with temporary labor costs impacting NOI.

Sequential decline in SHOP NOI attributed to higher seasonal utility costs and the noted labor costs.

The company’s net debt-to-adjusted EBITDAre stood at 10x, reflecting temporary expense increases; excluding these, leverage would improve to 9.3x.

Potential disruptions in revenue during the operator transition period, although management is optimistic about future performance.

5Notable Q&A Insights

Management expects operator transition costs to decrease to $1.5 million to $2 million in Q4.

The guidance for SHOP occupancy remains at 82% to 83% by year-end.

The transition was deemed necessary for long-term strategic positioning, despite short-term disruptions.

DHC plans to maintain liquidity and may not prioritize additional debt repayment beyond the upcoming maturity in 2026, focusing instead on operational improvements and strategic initiatives. Overall, DHC is navigating a significant transition in its operations while maintaining a positive outlook on long-term performance and financial stability, despite facing short-term challenges related to elevated costs and transitions.