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Universal Health Realty Income Trust Reports 2009 Second Quarter Financial Results

KING OF PRUSSIA, Pa., July 22 /PRNewswire-FirstCall/ -- Universal Health Realty Income Trust (NYSE: UHT) announced today that for the quarter ended June 30, 2009, net income increased 15% to $4.8 million, or $.40 per diluted share, as compared to $4.2 million, or $.35 per diluted share, during the same quarter in the prior year. For the six-month period ended June 30, 2009, net income increased 14% to $9.4 million, or $.80 per diluted share, as compared to $8.3 million, or $.70 per diluted share, during the comparable six-month period of the prior year.

Included in our net income during the three and six-month periods ended June 30, 2009 was approximately $300,000, or $.02 per diluted share, consisting of the following related to certain unconsolidated limited liability companies ("LLCs"): (i) the effect of a favorable adjustment resulting from the change in estimate to the operating expenses of an LLC, partially offset by; (ii) the operating losses sustained during the second quarter of 2009 at an LLC that owns a newly constructed medical office building that was completed and opened in April of 2009.

Funds from operations ("FFO") increased 14% to $8.5 million, or $.71 per diluted share, during the second quarter of 2009 as compared to $7.5 million, or $.63 per diluted share, during the comparable quarter of the prior year. For the six-month period ended June 30, 2009, FFO increased 12% to $16.5 million, or $1.39 per diluted share, as compared to $14.8 million, or $1.24 per diluted share during the comparable six-month period of the prior year.

The second quarter dividend of $.595 per share was paid on June 30, 2009. At June 30, 2009, our shareholders' equity was $140.6 million and our liabilities for borrowed funds were $87.8 million, including mortgage debt of consolidated entities, which is non-recourse to us, totaling $35.5 million.

The increases in base rentals-UHS facilities, depreciation and amortization, other operating expenses and interest expense during the three and six months ended June 30, 2009, as compared to the comparable prior year periods, resulted primarily from the operating results of two newly constructed medical office buildings which were completed and opened during third quarter of 2008 and the first quarter of 2009.

During the second quarter of 2009, the Deer Valley Medical Office Building III, located in Phoenix, Arizona, was completed and opened. Construction continues on two MOBs as follows: (i) Auburn Medical Office Building II located in Auburn, Washington, on the campus of an acute care hospital owned and operated by a wholly-owned subsidiary of Universal Health Services, Inc. ("UHS"), which is scheduled to be completed and opened during the fourth quarter of 2009, and; (ii) Texoma Medical Plaza located in Denison, Texas which is scheduled to be completed and opened during the first quarter of 2010. Texoma Medical Plaza is located on the campus of a replacement acute care hospital currently under construction by a wholly-owned subsidiary of UHS.

Universal Health Realty Income Trust, a real estate investment trust, invests in healthcare and human service related facilities including acute care hospitals, behavioral healthcare facilities, rehabilitation hospitals, sub-acute care facilities, surgery centers, childcare centers and medical office buildings. We have fifty real estate investments in fifteen states.

Funds from operations is a widely recognized measure of performance for Real Estate Investment Trusts ("REITs"). We believe that funds from operations and funds from operations per diluted share, which are non-GAAP financial measures ("GAAP" is Generally Accepted Accounting Principles in the United States of America), are helpful to our investors as measures of our operating performance. We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which may not be comparable to FFO reported by other REITs that do not compute FFO in accordance with the NAREIT definition, or that interpret the NAREIT definition differently than we interpret the definition. FFO does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income determined in accordance with GAAP. In addition, FFO should not be used as: (i) an indication of our financial performance determined in accordance with GAAP; (ii) an alternative to cash flow from operating activities determined in accordance with GAAP; (iii) a measure of our liquidity, or; (iv) an indicator of funds available for our cash needs, including our ability to make cash distributions to shareholders. A reconciliation of our reported net income to FFO is shown below.

To obtain a complete understanding of our financial performance these measures should be examined in connection with net income, determined in accordance with GAAP, as presented in the condensed consolidated financial statements and notes thereto in this report or in our other filings with the Securities and Exchange Commission including our Report on Form 10-K for the year ended December 31, 2008 and our Form 10-Q for the quarter ended March 31, 2009. Since the items included or excluded from these measures are significant components in understanding and assessing financial performance under GAAP, these measures should not be considered to be alternatives to net income as a measure of our operating performance or profitability. Since these measures, as presented, are not determined in accordance with GAAP and are thus susceptible to varying calculations, they may not be comparable to other similarly titled measures of other companies. Investors are encouraged to use GAAP measures when evaluating our financial performance.

The matters discussed in this report, as well as the news releases issued from time to time by us, include certain statements containing the words "believes", "anticipates", "intends", "expects" and words of similar import, which constitute "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

                       Universal Health Realty Income Trust
                        Consolidated Statements of Income
            For the Three and Six Months Ended June 30, 2009 and 2008
                 (amounts in thousands, except per share amounts)

                                              Three Months      Six Months
                                             Ended June 30,   Ended June 30,
                                             --------------   --------------
                                              2009    2008     2009     2008
                                              ----    ----     ----     ----
      Base rental - UHS facilities           $3,637  $3,096   $7,097   $6,158
      Base rental - Non-related parties       2,578   2,443    5,154    4,840
      Bonus rental - UHS facilities           1,050   1,063    2,145    2,071
      Tenant reimbursements and
       other - Non-related parties              711     597    1,425    1,085
      Tenant reimbursements and
       other - UHS facilities                    47      38       82       62
                                                 --      --       --       --
                                              8,023   7,237   15,903   14,216
                                              -----   -----   ------   ------

      Depreciation and amortization           1,586   1,449    3,124    2,855
      Advisory fees to UHS                      389     376      779      743
      Other operating expenses                1,536   1,170    3,042    2,305
                                              -----   -----    -----    -----
                                              3,511   2,995    6,945    5,903
                                              -----   -----    -----    -----

    Income before equity in income
     of unconsolidated limited
     liability companies ("LLCs")
     and interest expense                     4,512   4,242    8,958    8,313

      Equity in income of
       unconsolidated LLCs                      959     429    1,766    1,041

    Interest expense, net                      (669)   (512)  (1,276)  (1,037)

                                             ------  ------   ------   ------
    Net income                               $4,802  $4,159   $9,448   $8,317
                                             ======  ======   ======   ======

                                              -----   -----    -----    -----
    Basic earnings per share                  $0.40   $0.35    $0.80    $0.70
                                              =====   =====    =====    =====

                                              -----   -----    -----    -----
    Diluted earnings per share                $0.40   $0.35    $0.80    $0.70
                                              =====   =====    =====    =====

    Weighted average number of
     shares outstanding - Basic              11,876  11,849   11,868   11,846
    Weighted average number of
     share equivalents                            4      36        8       37
                                                ---      --      ---       --
    Weighted average number of
     shares and equivalents
     outstanding - Diluted                   11,880  11,885   11,876   11,883
                                             ======  ======   ======   ======

    Calculation of Funds From Operations ("FFO"):

                                              Three Months      Six Months
                                             Ended June 30,   Ended June 30,
                                             --------------   --------------
                                              2009    2008     2009     2008
                                              ----    ----     ----     ----
    Net income                               $4,802  $4,159   $9,448   $8,317

    Plus:  Depreciation and
     amortization expense:
        Consolidated investments              1,561   1,429    3,076    2,817
        Unconsolidated affiliates             2,095   1,863    4,025    3,650
                                              -----   -----    -----    -----
      Funds from operations  (FFO)           $8,458  $7,451  $16,549  $14,784
                                             ======  ======  =======  =======

      Funds from operations (FFO)
       per share - Basic                      $0.71   $0.63    $1.39    $1.25
                                              =====   =====    =====    =====
      Funds from operations (FFO)
       per share - Diluted                    $0.71   $0.63    $1.39    $1.24
                                              =====   =====    =====    =====

      Dividend paid per share                $0.595  $0.585   $1.185   $1.165
                                             ======  ======   ======   ======

                 Universal Health Realty Income Trust
                     Consolidated Balance Sheets
                    (dollar amounts in thousands)

                                            June 30,  December 31,
    Assets:                                   2009          2008
    -------                                   ----          ----

    Real Estate Investments:
      Buildings and improvements           $205,016      $191,761
      Accumulated depreciation              (69,265)      (66,255)
                                            -------       -------
                                            135,751       125,506
      Land                                   19,348        19,348
      Construction in progress                    -         9,795
                                                 --         -----
         Net Real Estate Investments        155,099       154,649
                                            -------       -------

      Investments in and advances to
       limited liability companies
       ("LLCs")                              64,620        56,462

    Other Assets:
      Cash and cash equivalents               1,987           618
      Base and bonus rent receivable
       from UHS                               2,057         1,982
      Rent receivable - other                   703           945
      Deferred charges, notes receivable
       and intangible and other assets,
       net                                    7,063         6,400
                                              -----         -----
        Total Assets                       $231,529      $221,056
                                           ========      ========


      Line of credit borrowings             $52,300       $39,000
      Mortgage notes payable, non-
       recourse to us                         6,785         6,892
      Mortgage, construction and other
       loans payable of consolidated
       LLCs, non-recourse to us              28,734        25,800
      Accrued interest                          135           190
      Accrued expenses and other
       liabilities                            2,009         3,196
      Tenant reserves, escrows, deposits
       and prepaid rents                        721           883
                                                ---           ---
        Total Liabilities                    90,684        75,961
                                             ------        ------


      Preferred shares of beneficial
       interest, $.01 par value;
       5,000,000 shares authorized;
       none issued and outstanding                -             -
      Common shares, $.01 par value;
       95,000,000 shares authorized;
       issued and outstanding:
       2009 - 11,897,817
       2008 -11,865,919                         119           119
      Capital in excess of par value        189,681       189,347
      Cumulative net income                 348,166       338,718
      Cumulative dividends                 (397,335)     (383,256)
                                           --------      --------
        Total Universal Health Realty
         Income Trust Shareholders'
         Equity                             140,631       144,928
      Third-party equity interests              214           167
                                                ---           ---
        Total Equity                        140,845       145,095
                                            -------       -------
        Total Liabilities and Equity       $231,529      $221,056
                                           ========      ========

SOURCE Universal Health Realty Income Trust
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