Summary of DHCNL 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 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 NOI: $29.6 million, with a year-over-year increase of 7.8%.

SHOP Occupancy: Increased 210 basis points year-over-year to 81.5%.

G&A Expenses: Included a $5.7 million business management incentive fee due in January 2026.

2Strategic Updates and Business Highlights

Transitioning 116 communities from AlerisLife to new operators, with 85 communities transitioned by the call date.

Anticipated proceeds of $25 million to $40 million from AlerisLife's wind-down expected in 2026.

New operating agreements with a 10-year term and performance-based incentives to align interests.

Increased leasing activity in the Medical Office and Life Science portfolio, with 86,000 square feet leased at 9% above prior rents.

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

3Forward Guidance and Outlook

Reaffirmed full-year SHOP NOI guidance of $132 million to $142 million.

Expected improvements in adjusted EBITDAre for 2025 in the range of $275 million to $285 million.

Anticipated repayment of January 2026 bonds as early as year-end 2025, with no debt maturities until 2028.

4Bad News, Challenges, or Points of Concern

Temporary increase in labor costs of approximately $5.1 million due to the transition of management contracts, impacting NOI.

Sequential decline in SHOP NOI attributed to higher seasonal utility costs and transition-related expenses.

Potential disruptions in revenue from operator transitions, although the impact is expected to diminish as transitions complete.

5Notable Q&A Insights

Anticipated operator transition costs in Q4 are expected to be around $1.5 million to $2 million, down from $5.1 million in Q3.

Management acknowledged that while there may have been some disruption in top-line revenue due to transitions, the focus is on stabilizing operations moving forward.

The majority of the disposition pipeline is expected to close by year-end, with a small portion potentially slipping into Q1 2026.

Management indicated that excess capital from asset sales would likely be retained as liquidity rather than used for additional debt repayment, given the favorable maturity profile. This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, challenges, and insights from the Q&A session, providing a balanced view of DHCNL's current position and outlook.