Key Takeaways
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Medical Properties Trust fell 13% today after third-quarter normalized FFO of $0.11 a share missed the $0.13 expected.
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Tenant HSA's skipped September rent cost two cents a share, and MPT's dividend leaves little room for another miss.
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Omega Healthcare Investors and Sabra Health Care REIT report next week, which will show whether operator trouble is spreading.
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MPT trades below its five-year average multiple, for good reason.
Medical Properties Trust ( MPT:NYSE )sank 13% today after third-quarter results missed on FFO and revenue, with a familiar tenant at the center of it.
Fellow healthcare landlords shrugged it off: Omega Healthcare Investors ( OHI:NYSE )and Sabra Health Care REIT ( SBRA:NASDAQ )both gained around 2%.
What exactly happened
Tough quarter all in all.
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Normalized FFO of $0.11 a share, down from $0.13 a year ago and short of the $0.13 consensus.
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Revenue of $250.1 million, against $262.5 million expected.
Chairman and CEO Edward Aldag said HSA faces "continued revenue cycle management challenges that precluded payment of September rent, reducing our NFFO by two cents during the quarter."
That's the entire FFO miss.
On the call, he put it more simply: "Simply put, these hospitals have not done a good enough job of billing and collecting." HSA hired Ovation Healthcare to run its hospitals, and MPT gave it more working-capital support in the quarter.
HSA is small, but MPT is still building for it
HSA was 6.2% of MPT's third-quarter revenue, but MPT has about $76 million left to spend on two hospitals it's building for it. MPT still sees 2027 cash rents above $1.0 billion, a forecast it calls conservative on HSA.
Omega and Sabra suggest this is MPT's problem alone, so far. Omega's bankrupt tenant Genesis paid all its rent through July, and Omega raised its AFFO guidance in July. Sabra's skilled nursing tenants covered their rent 2.49x in the second quarter, up again. If both reports next week look like that, HSA is a one-tenant problem.
See analyst ratings on Medical Properties Trust (it's free):
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The dividend has little cushion
Analysts expect the dividend to eat up most of MPT's AFFO this year and next:
That's a risky 88% AFFO payout ratio for 2026, and today's miss makes me expect those estimates to come down. The $2.4 billion of new secured notes pushed most of MPT's debt out to 2032, at a steep 9.25%.
Cheap for a reason
MPT traded at 7.3x forward AFFO at the last close, below its five-year average of 9.2x:
At today's price, it's even lower.
My take: The drop looks deserved. I'd want proof that Ovation can get HSA paying before buying. Of course, Ovation is just taking over, and a few quarters of full rent from HSA would make this multiple look a lot more attractive.
So what is Medical Properties Trust stock actually worth?
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