Summary of DHCNI Q1 2026 Earnings Call

1Key Financial Results and Metrics

Normalized Funds from Operations (FFO): $33.1 million, or $0.14 per share, exceeding analyst expectations.

Adjusted EBITDAre: $74 million, also above consensus estimates.

Consolidated Net Operating Income (NOI): Increased 4.7% year-over-year to $75.9 million.

Same-Property SHOP NOI: Rose 13.5% year-over-year to $44.3 million, with occupancy growth of 110 basis points and average monthly rate growth of 5.9%.

Same-Property Cash Basis NOI: Increased 8.6% year-over-year.

General and Administrative (G&A) Expenses: Included $6.6 million in incentive management fees; excluding this, G&A would have been $7.4 million.

2Strategic Updates and Business Highlights

DHC is focused on enhancing operational performance through active asset management and partnerships with new operators, yielding positive results in both revenue and expense management.

The company is targeting capital deployment into high-return projects, specifically converting underutilized skilled nursing wings into independent living or assisted living units, with an initial investment of approximately $20 million expected to add 150 units.

The medical office and life science portfolio showed solid performance with same-property occupancy increasing to 95.3% and NOI rising 3.7% year-over-year.

3Forward Guidance and Outlook

DHC reaffirmed its 2026 guidance for:

SHOP NOI: $175 million to $185 million

Medical Office and Life Science NOI: $94 million to $98 million

Adjusted EBITDAre: $290 million to $305 million

Normalized FFO: $0.52 to $0.58 per share

The company expects continued growth in SHOP NOI driven by improved expense management and operational efficiencies.

4Bad News, Challenges, or Points of Concern

Same-property occupancy in the SHOP segment remained flat quarter-over-quarter, attributed to seasonality and ongoing operator transitions, which may hinder growth in the short term.

Approximately 9% of annualized rental income in the medical office and life science segment is set to expire through 2026, with a portion expected to vacate.

The company acknowledged potential fluctuations in G&A expenses due to the performance-based management fees, which could impact overall profitability.

5Notable Q&A Insights

Management confirmed that the recurring CapEx guidance includes both maintenance and refresh capital, with expectations for a modest reduction in maintenance costs moving forward.

The focus for new investments will primarily be on renovations rather than acquisitions, leveraging existing portfolio opportunities.

The transition from AlerisLife is progressing well, with incremental benefits expected as new operators continue to optimize operations.

Management is optimistic about achieving the SHOP NOI growth targets despite the flat occupancy in Q1, citing a strong pipeline of opportunities and improved operational strategies. Overall, DHC reported a strong first quarter with positive financial metrics and strategic initiatives aimed at long-term growth, although challenges in occupancy and potential fluctuations in expenses remain areas to monitor.