MPT

Thank you for standing by. My name is Jeannie, I will be your conference operator today. At this time, I would like to welcome everyone to the Medical Properties Trust first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise during this 60-minute call. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Charles Lambert, Senior Vice President. Please go ahead.

Good morning. Welcome to the MPT conference call to discuss our first quarter 2026 financial results. With me today are Edward K. Aldag Jr., Chairman, President, and Chief Executive Officer of the company, Steven Hamner, Executive Vice President and Chief Financial Officer, Kevin Hanna, Senior Vice President, Controller, and Chief Accounting Officer, Rosa Williams, Senior Vice President of Operations and Secretary, and Jason Fry, Managing Director, Asset Management, and Underwriting. Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at mpt.com in the investor relations section. Additionally, we're hosting a live webcast of today's call, which you can access in that same section.

During the course of this call, we will make projections and certain other statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements. We refer you to the company's reports filed with the Securities and Exchange Commission for a discussion of the factors that could cause the company's actual results or future events to differ materially from those expressed in this call. The information being provided today is as of this date only, and except as required by the federal securities laws, the company does not undertake a duty to update any such information.

In addition, during the course of the conference call, we will describe certain non-GAAP financial measures which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, MPT has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at mpt.com for the most directly comparable financial results and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Thank you, Charles, and thanks to all of you for joining us this morning on our first quarter 2026 earnings call. In a moment, you will hear details from the rest of the team, but let me first summarize what we're seeing across our diverse portfolio of hospitals. Total portfolio EBITDARM coverage remained steady year-over-year at 2.5x. Our post-acute portfolio delivered standout results, with EBITDARM increasing approximately $80 million year-over-year, led by a 24% increase at MEDIAN, a 16% increase at Ernest Health, and a 61% increase at Vibra, which continues to deliver excellent results following the new 20-year master lease agreement executed in late 2025. General acute performance was largely stable, with EBITDARM increasing nearly $40 million year-over-year.

These strong results were partially offset by our behavioral health portfolio, which continues to navigate two entirely separate challenges in the U.S. and U.K. markets. While both markets continue to experience strong demand, in the U.S., providers are grappling with staffing shortages, and in the U.K., demand is being dampened by funding pressures at the NHS. Rosa will elaborate shortly on strategic actions being taken to address this. Looking ahead, we are encouraged by the trends we see across the portfolio in early 2026. Our momentum continues to build in post-acute. Our general acute care performance remains stable, with strong performance across the portfolio. We continue to see solid demand trends in the behavioral sector. Additionally, our portfolio of recently transitioned tenant rent continues to ramp as expected, with our tenants across Florida, Texas, Arizona, and Louisiana fully current on rent due through April.

Quorum and HonorHealth reached their fully stabilized rents in the third quarter of last year, and HSA ramped to 75% in March, and we continue to expect 100% of monthly payments from HSA beginning in October. Based on these encouraging trends, we remain confident in reaching our goal of over $1 billion in annualized cash rent by year-end. Rosa?

Thank you, Ed. This past quarter marked a period where our mature portfolio continued to deliver steady results while new operators began moving from transition towards stabilization. That progress is increasingly visible as we look forward through 2026 and beyond. In this context, our international assets have provided a meaningful stabilizing force. In Germany, MEDIAN delivered one of its best operating periods to date, supported by high occupancy, improving reimbursements, and sustained demand across orthopedics and other rehabilitation services. We are confident in MEDIAN's ability to drive strong performance throughout 2026, given its scale and operating discipline. Swiss Medical Network reinforced its leading position in the Swiss healthcare market through strategic acquisitions and expanded outpatient activities, focusing on disciplined capital deployment and the growth of their integrated care models.

In the U.K., Circle Health continues to perform well within the general acute segment, benefiting from private pay utilization and higher acuity case mix. Priory reports that demand for inpatient mental health services in the U.K. continues at record levels. Historically, the National Health Service has reimbursed private providers for a substantial majority of these patients. As we have reported on previous earnings updates, the NHS is significantly reducing that reimbursement. In reaction, Priory continues to prioritize service line optimization, cost management, and selective repositioning of certain facilities. We and Priory believe this to be a temporary condition, but the timing and degree of any recovery is unpredictable. For purposes of our reported Priory EBITDARM coverages in this morning's supplemental, we have revised our allocated central cost better reflecting retrospective, recent, and future facility-level actual performance.

Applying these allocations retrospectively has the effect of reducing trailing 12 months coverage by 40 basis points for Priory, by 20 basis points for the behavioral health property type, and not at all for the consolidated portfolio. Turning to the U.S. portfolio, I'll begin with the operators most closely tied to recent transitions. At HSA, management is focused on improving its constrained liquidity and cash collections. In April, HSA engaged and fully onboarded Conifer to manage its revenue cycle operations. Additionally, HSA will be utilizing its own MEDITECH electronic health records system beginning tomorrow. These are critically important steps that HSA is confident will improve collections, drive operational efficiency, and reduce IT expense. Management is also continuing efforts to add service lines, recruit physicians, and improve the facilities and equipment. HSA recently obtained equipment financing and has already begun ordering high-priority replacement equipment with these funds.

Additionally, CMS recently granted contingent approval for the state of Florida's Medicaid Directed Payment Program. HSA expects a significant increase in their net benefit compared to 2025, which would substantially improve their liquidity position. HSA has numerous capital projects in process, including a new parking deck, structural and electrical recertifications, wound care center improvements, elevator upgrades and modernization, roof restorations, and replacement of critical equipment. Turning to NOR, operations have been stable in the first few months, with EBITDARM already in excess of its full contractual rent obligation, which goes into effect at the end of the year. Inpatient admissions are ahead of prior year, and NOR is working to add service lines such as interventional radiology and restarting construction of a new emergency department at Culver City.

This new state-of-the-art ED includes 23 private patient rooms, increases treatment and office space by 80%, and fully meets state-mandated seismic standards. This project is expected to be completed in the summer of 2027. We are encouraged by the steps NOR is taking to improve these facilities that anchor care for some of the most underserved communities in Los Angeles County. More broadly, across the transitioned U.S. portfolio, performance remains aligned with underwriting expectations. As Ed mentioned, Quorum Health and HonorHealth are paying fully stabilized rent as of the third quarter 2025. With HSA now ramped to 75%, we have line of sight towards full contractual rent across these assets as we move through the ramp period. Turning to the rest of our U.S. operators, performance trends remain stable.

Ernest Health remains a standout across post-acute rehabilitation, with strong inpatient rehab performance, improving operating leverage, and balance sheet strengthening following its refinancing. Ernest plans to convert all six MPT-owned LTAC facilities to IRFs by the end of 2026, as it transforms into a pure-play rehab operator. Ernest Rehabilitation Hospitals have historically had meaningfully higher EBITDARM coverages than their average LTAC. At LifePoint, while performance has moderated from the elevated growth experienced in 2024, admissions and acuity continue to support stable cash generation. Following the balance sheet and portfolio repositioning actions discussed last quarter, Vibra's EBITDARM coverage improved to 3x, driven by accelerating volumes across both the rehabilitation and long-term acute care segments. Vibra's California assets performed particularly well, including the Redding facility, which is tracking ahead of MPT's underwriting expectations.

As we look into 2026, we expect sustained progress around rent ramps, stabilization across transitioned assets, and steady performance from our core operators. Collectively, these trends give us a clear view toward normalized contractual rent across the portfolio as we approach 2027. We believe the portfolio is increasingly positioned to deliver durable, sustainable cash flows and strategic growth opportunities over the long term. Kevin?

Thank you, Rosa. Today, we reported normalized FFO of $0.14 per share for the first quarter of 2026, which was in line with our expectations. As we disclosed in last quarter's results, we're approximately $0.03-$0.04 higher than it otherwise would have been due to one-time cash rent receipts. G&A expense was lower year-over-year in the quarter, primarily driven by the lower stock compensation expense due to the change in fair market value of certain cash settled awards in 2024 and 2025, of which no award has been earned or vested at this time. Additionally, as discussed in our Form 10-K filing, we moved seven additional legal entities into our U.K. restructure effective in the first quarter, which resulted in a one-time $44 million tax benefit in the first quarter. Steve?

Thank you, Kevin. I have just a few brief comments. Our balance sheet is relatively unchanged from the fourth quarter. Our nearest maturity is a EUR 500 million unsecured notes issue due in October of this year, which has a coupon of only 0.99%. Our $200 million term loan will mature in June of 2027, as will our revolver, subject to our extension right. Our $1.4 billion unsecured notes issue matures in October 2027. We retain the options that we have discussed on recent quarterly updates, and we continue to plan around our ample security value and indenture flexibility to maximize delevering and interest coverage as our revenue continues to grow. As we have previously suggested, our near-term use of capital for acquisitions is expected to be modest, strategic, and accretive.

During the quarter, we completed only the EUR 23 million acquisition of a hospital in Germany that we had previously reported and had been negotiating for well over a year. Separately, and again consistent with our previous guidance that dispositions may continue at modest levels, we completed the sales of two small hospitals in the U.S. Operationally, as already discussed, cash rent collections from the hospitals we re-tenanted in September 2024 continue to be paid in accordance with the contractual ramp, with the exception of the small Ohio and Pennsylvania facilities that we have previously explained. Based on cash rent received for April, our annualized rent for these facilities, net of those we have sold, represents about 74% of the contractual cash rent that was required under the previous master lease at the time of the September 2024 transition.

Once HSA reaches its fully stabilized cash rent beginning in this year's fourth quarter, that percentage is expected to grow to about 98% of the previous rent. The remaining 2% generally relates to the Ohio and Pennsylvania facilities. We again received no rent from these tenants in the first quarter, and we believe it is increasingly unlikely that they will return to operational profitability in the immediate future, partially because local health regulators have not granted necessary approvals to reopen. Accordingly, we recognize an impairment of our loan collateral related to these two facilities. As Ed mentioned, we remain confident that our fourth quarter run rate for cash rents, including our portion of JV rents, will approximate $1 billion. During the quarter, Prospect completed the sales of its remaining hospitals and continues to collect patient and other receivables in the ordinary course.

MPT's previously discussed DIP loan at quarter end was approximately $60 million and is secured primarily by the proceeds from the claims that the bankruptcy estate is litigating. As of March 31, those proceeds are estimated to substantially exceed our DIP loan commitment. To the extent there is such an excess, we will also receive a significant but as yet undetermined portion over and above our DIP loan balance. While outstanding, the DIP loan accrues interest at all-in rates approximating 16%, although we will recognize any such income only as received. With that, I will turn the call back to the operator to queue any questions. Jeannie?

At this time, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. Please limit to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Michael Mueller with JPMorgan. Please go ahead.

Yeah. Hi. I know you gave some, you gave some color around the percentage of rents tied, I guess, the cash collections in April as compared to the prior master lease. Can you give us any more clarity in terms of the actual dollars, dollar amounts collected, and are you still targeting that roughly $160 as it relates to that Steward pool?

We are, Mike. When I gave those percentages, 74%, 98%, that's with respect to that $160 million target amount. Going forward, again, pro forma for what we collected in April, we'll be collecting 74% of that $160 million.

Got it. Okay. Just wanted to make sure that that was the right way to think about that. Second question. I know you talked about maintaining financial flexibility as it relates to upcoming maturities, can you just tell us if you were heading down that path today, number one, where do you think refi? Are you largely looking particularly for the 2026 maturity at a refi? What would rates be? I mean, just get a little more granular, if you can, about what we should be expecting the next couple of quarters there.

Yeah. We're not in a position to really know with any precision what a coupon may be. That'll be driven by a lot of things, including, you know, as you point out, the sequencing of what we might address first, what we might address comprehensively. I'll just point, just for reference and nothing else, our most recent secured lending has been done with our German portfolio that we did about one year ago at a 10-year, roughly 5%+ coupon. Obviously, a little over one year ago, we did secured senior notes that are today trading in the 6%-7% range. I'm not predicting that that's what we'll be able to refinance at.

Those are data points that, you know, we all have to look at.

Okay. Appreciate it. Thank you.

Your next question comes from the line of Michael Carroll with RBC Capital Markets. Please go ahead.

Yep. Thanks. Can you guys provide us some color on HSA's current financial position, just given the noise that has occurred over the past few months? Will the Florida DPP payments that Rosa mentioned, will that just be used to catch up on their accounts payable, or do you think that they could use some of those proceeds to pay down the working capital loan that you have out to them?

Mike, I answer the last part of that question first. The answer is yes. We think they'll use some of the DIP funding to repay our ABL. We also believe that they are in a position now where they've got real interest in getting a permanent ABL, which hopefully will replace our 100% of our ABL in the recent near future. Second part of the question was how are they doing financially. From an EBITDARM standpoint, they continue to perform exceptionally well. They're generating approximately 3x EBITDARM coverage on a current cash rent basis. They still are continuing not to collect as much cash as we and they would like to see.

If you remember recently in their press releases, they've entered into a transaction with Conifer to take over their revenue cycle management. That literally just happened last month, and they have just recently begun getting off of the old Steward MEDITECH license and having their own, literally going, the first hospital, I believe, was sometime in late April. They've gone from roughly a 78% to roughly an 82% in cash collections. That's a big number, but they need to get up in, obviously in the 90s for those numbers to work well.

Okay. That's helpful. Just switching to Priory real quick. When Rosa was kind of highlighting that the NHS payment reductions were dropped or reduced, when does that actually start hitting their P&L? Does the 1/6 coverage ratio in the supplemental fully reflect those lower payments, or should we expect that coverage ratio to continue to drop as more quarters of that lower payment starts to roll on into that calculation?

No, we're hopeful that we're near the bottom of that. As I think I said or Rosa said in her prepared remarks, we think it's a temporary situation. There's no predictability of that. Historically, private providers in the U.K. have provided a significant majority of all of the mental health, especially inpatient services. What that means is if the NHS is not paying, then those people are going untreated, and we think that's unsustainable. We're hopeful that at a trailing 12, 1.6x coverage, and again, keep in mind, that's an EBITDARM coverage, that we're near the bottom. There's no assurance of that. We're comfortable with our original underwriting. Our facilities continue to be fully paid rent.

You know, I think again, the biggest takeaway is, this really isn't sustainable. Once again, we can't predict the timing or the velocity of any recovery.

Mike, it's really a political issue here. The good news for us and for all behavioral health operators in the U.K. is that demand is exceptionally strong, continues to increase. The NHS has limited the number of beds available in private care for NHS patients in the behavioral sector. Obviously, as Steve points out, that can't last forever.

Just real quick, when you say it's temporary, do you think that the NHS could change those standards? I'm assuming that's gonna take some time, right? That's not gonna happen in the next year or so.

I don't know that we agree with that. With the amount of demand that you have for the patients there, it literally is just a funding and political issue and the funding for the NHS and the demand in the public that they have access to behavioral health matters. It literally could be fixed overnight. I'm not suggesting that it will be, but it could be.

Okay, thanks.

Your next question comes from the line of John Kilichowski with Wells Fargo. Please go ahead.

Hi, thank you. Good morning. My first question is just on the potential impacts of the one big beautiful bill to your portfolio. When you think about the flow throughs of once that, you know, bills is implemented, you know, how will that affect your tenants and maybe specifically HCA as it's tracking towards, you know, you said one time coverage at full rate?

John, from the big beautiful bill overall, very broadly speaking, our operators do not believe overall that it will have a negative effect. There are obviously a few hospitals that it will have more of effect than it will on others. HCA is fortunate in their portfolio that they don't believe it will have a significant negative effect on any of their facilities.

Okay, that's helpful. Thank you. My second question is, did you lend to any of your tenants in the quarter?

Very limited. During the quarter, the only working capital loan we made was to the small Pennsylvania tenant that I mentioned earlier, and that was for less than $1 million. We previously reported we're funding through a secured loan the approximate $25 million cost of HSA's conversion to the MEDITECH EMR system that Rosa mentioned, that actually goes into effect, she may have said, as early as today or tomorrow. We loaned about $13 million during the quarter under that loan. Then we also funded through a second secured loan approximately $12 million in capitation liabilities that remained at the Prospect California hospitals when they exited bankruptcy very early this year.

Very helpful. Thank you.

Your next question comes from the line of Farrell Granath with Bank of America. Please go ahead.

Hello, good morning. This is Farrell Granath. My first question was just about the dispositions. Just quickly wanted to touch on the first quarter disposition that was expected, that was mentioned on the last call. I believe it was with the Prospect remaining Waterbury asset. Was that completed in this quarter, or is that still ongoing?

The, yes, the broader Waterbury transaction was completed in the quarter. I think I mentioned on my remarks that while those proceeds had been received and paid to us, the estate continues to collect receivables and will continue to do that probably for at least a few more months, just in the ordinary course. Those proceeds will also come in to repay our DIP loan.

Thank you. Also when just considering your portfolio, how do you evaluate potential targets for dispositions? Is there a certain product that you're receiving inbound, either as a value add or more stabilized assets that get more attention that you'd consider disposing of?

Yeah, Farrell, we obviously get a lot of inbounds and have for the last 20-something years on different assets. When those come in, we look at the total picture and whether or not it's something that we would like to get rid of or whether the price was high enough that it would be something that we would be willing to accept. We don't have a list of properties other than some of the few remaining Steward closed facilities that we're actively marketing. Other than that, we don't have facilities that we're actively marketing.

Okay, thank you very much.

There are no further questions at this time. I will now turn the call back over to Ed Aldag for closing remarks.

Amy, thank you very much. As always, if you have any additional questions, don't hesitate to call us once the call is over. Thank you for your time.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Medical Properties Trust Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Charles Lambert, Senior Vice President. Please go ahead.

Thank you, and good morning. Welcome to the MPT conference call to discuss our fourth quarter and full year 2025 financial results. With me today are Edward K. Aldag, Jr., Chairman, President and Chief Executive Officer of the company; Steven Hamner, Executive Vice President and Chief Financial Officer; Kevin Hanna, Senior Vice President, Controller and Chief Accounting Officer; Rosa Williams, Senior Vice President of Operations and Secretary; and Jason Frey, Managing Director, Asset Management and Underwriting. Our press release was distributed this morning and furnished on Form 8-K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at mpt.com in the Investor Relations section. Additionally, we're hosting a live webcast of today's call, which you can access in that same section. During the course of this call, we will make projections and certain other statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our financial results and future events to differ materially from those expressed in or underlying such forward-looking statements. We refer you to the company's reports filed with the Securities and Exchange Commission for a discussion of the factors that could cause the company's actual results or future events to differ materially from those expressed in this call. The information being provided today is as of this date only, and except as required by the federal securities laws, the company does not undertake a duty to update any such information. In addition, during the course of the conference call, we will describe certain non-GAAP financial measures, which should be considered in addition to and not in lieu of comparable GAAP financial measures. Please note that in our press release, Medical Properties Trust has reconciled all non-GAAP financial measures to the most directly comparable GAAP measures in accordance with Reg G requirements. You can also refer to our website at mpt.com for the most directly comparable financial measures and related reconciliations. I will now turn the call over to our Chief Executive Officer, Ed Aldag.

Thank you, Charles, and thanks to all of you for joining us this morning on our fourth quarter 2025 earnings call. Before you hear from the rest of the team, I'll spend a few minutes discussing what we're seeing across our diverse portfolio of hospitals as well as a few recent strategic updates. Beginning with performance trends. Total portfolio EBITDARM coverage increased year-over-year to 2.6x. General acute operators delivered particularly strong performance with more than $130 million EBITDARM increase versus the same quarter last year. For the second consecutive quarter, post-acute care operators reported a $50 million EBITDARM increase year-over-year, led by a 15% improvement at Ernest Health, a 28% improvement at Vibra and an 8% increase at Median. Finally, our behavioral health portfolio was down slightly year-over-year, driven by certain volume headwinds in the U.K. market and labor cost pressures in the U.S., which Rosa will elaborate on shortly. During the quarter, we continued to take decisive steps to strengthen our portfolio. Given the strong performance of its post-acute facilities over the past few quarters, we are pleased to enter into a new 20-year master lease agreement with Vibra. We capitalized on an opportunity to acquire a high-performing post-acute facility in California for approximately $32 million with a strong cap rate. More recently, we acquired a new post-acute care facility in Europe for EUR 23 million. We also continue to identify opportunities within the portfolio to achieve attractive returns that enhance our capital allocation flexibility moving forward. To that end, we sold 6 smaller properties during the quarter. Before turning it over to Rosa, I also want to acknowledge that 2025 marked our 20th anniversary as a publicly traded company. Throughout the past 2 decades, we have been guided by the same core principles, providing hospital operators with capital solutions that allow them to focus on patient care, acquiring high-value real estate to deliver attractive returns for our shareholders and supporting the communities we serve around the world. These principles have stayed true as we've navigated periods of significant opportunities and challenges, and they continue to shape the strength of our business today. We are entering our third decade as a public company with strong conviction in our business model and a clear focus on strengthening our platform for the long term. We recently unveiled an updated brand identity, and we were able to acquire MPT as our stock ticker. Given the encouraging performance trends across the portfolio, we remain confident in reaching our goal of over $1 billion in annualized cash rent by year-end. Rosa?

Thank you, Ed. Entering 2026, I'm encouraged by the strength and steadiness we see across our global portfolio. Echoing Ed's comments, 2025 was a year in which we solidified our foundation for long-term sustainable performance. Our operators' discipline, coupled with our own structured approach to re-tenanting and portfolio positioning gives us confidence as we look ahead to 2026 and beyond. Our international portfolio today comprises 50% of our investments, and these operators continue to be a cornerstone of portfolio stability. In Germany, Median recorded its strongest quarter since entering the portfolio with quarterly EBITDARM increasing more than 20% year-over-year with occupancy at 90%. Improving reimbursement levels, growing orthopedics demand contributed to notable operational momentum that positions Median for continued strong performance in 2026. In the U.K., general acute operators such as Circle Health sustained strong performance in the face of an evolving health care landscape. As a result of NHS budget constraints impacting the behavioral health market, Priory remains focused on adjusting to shifts in referral patterns and strategically modifying service lines to meet market demand at certain of its facilities. Across Continental Europe, Swiss Medical Network reported solid year-over-year growth in hospital EBITDARM. Its new clinical collaboration with the Mayo Clinic enhances its long-term capabilities and international reputation. Additional operators such as HM Hospitales, eMDs and Atos continue to produce steady performance trends. Turning to the U.S. portfolio. Ernest Health delivered double-digit growth in EBITDARM year-over-year, supported by strong performance of their inpatient rehabilitation facilities and expansion of inpatient rehab units within LTAC facilities. Ernest also successfully refinanced their 2026 term loan and revolver in Q4, extending maturities out to 2030 and compressing the rate, a significant credit enhancement. At LifePoint Behavioral, new leadership is implementing forward-looking program enhancements that will modernize the segment, control labor costs and support a strong revenue mix throughout 2026. As Ed mentioned, we recently entered into a new master lease agreement with Vibra, who increased EBITDARM coverage 28% year-over-year in Q3, driven by strong earnings in the rehab division. Our other long-standing tenants such as Surgery Partners and pipeline continue to report healthy performance trends. Finally, our portfolio of recently transitioned tenants rent continues to ramp, and we expect them to be at 100% contractual rent by the end of 2026. During the quarter, we entered into a new 15-year lease agreement with NOR Health Systems in California, which is expected to reach stabilized annual cash rent of $45 million in December, in line with the rent previously paid by Prospect for these facilities. HSA showed measured progress in Q4 with modest improvements in collections across its markets. Upcoming supplemental receipts and the expected implementation of the MEDITECH EMR system in Q2 are anticipated to support operations and facilitate cost savings. While HSA remains focused on improving cash collections, it's important to remember that HSA will finally be fully stand-alone operationally once the EMR system is implemented. We feel comfortable with the steps underway to drive revenue cycle management enhancements. Our team continues to carefully monitor performance across these new operators. In fact, just last week, members of our team visited the NOR and HSA Miami facilities, all of which had high patient activity. It's clear that efforts to bring back doctors and improve EMS turnaround times are already having a positive impact. While the facilities are generally clean and in good condition, each operator is actively undertaking projects to modernize the properties. Taken together, the consistent performance of our international assets, the steady execution of our core U.S. operators and the ongoing ramp of our transition tenants provide us with a clear confident outlook heading into 2026. We expect 2026 to be a year of continued stabilization and increasing cash rents as our tenants capitalize on service line enhancements, reimbursement tailwinds, EMR modernization and operating efficiencies gained throughout 2025. Our global portfolio is stronger, more diversified and more resilient than it has ever been. We are confident in the long-term earnings power of these assets, and we remain steadfast in our commitment to generating stable, growing cash flows for shareholders. Kevin?

Thank you, Rosa. Today, we reported normalized FFO of $0.18 per share for the fourth quarter and $0.58 per share for the full year 2025. As mentioned in our press release this morning, we completed a restructuring transaction with Vibra in the fourth quarter, resulting in a new master lease agreement and collection of approximately $18 million in the form of a onetime rent payment for past obligations. In October, we received a $4 million payment of September rent from HSA. As a result of these cash receipts, normalized FFO was approximately $0.03 to $0.04 higher than it otherwise would have been for the quarter. In the fourth quarter, we entered into a new lease with NOR Healthcare Systems for the 6 California properties previously leased to Prospect. NOR is contractually scheduled to begin paying partial rent in June 2026 with a ramp-up to 100% of contractual rents in December of 2026. We plan to account for their revenue on a cash basis as well. G&A expense was lower year-over-year in the quarter, primarily driven by the lower stock compensation expense due to the change in fair market value of certain performance-based equity compensation. Finally, we recorded approximately $34 million of impairment charges in the quarter, the majority of which related to Prospect. From a cash flow perspective, we received approximately $70 million of net proceeds from the Prospect bankruptcy in the quarter, with a remaining investment of $60 million expected to be collected in 2026 as the bankruptcy process nears and end. Steve?

Thank you, Kevin. I just have a few general comments about our financial position and outlook, and then we can take any questions. First, a general reminder of our debt maturities and our options for refinancing and deleveraging. Our nearest maturity is a EUR 500 million unsecured notes issue due in October of this year. We are paying a rate of 0.99% on these notes, and so we'll, of course, maximize the time benefit from that rate. Our bank revolver and $200 million term loan will mature in June of 2027 after our presumed extension of this facility. And then our $1.4 billion unsecured notes issue matures in October 2027. We retain numerous options for refinancing maturing debt over the next 2 years. Without belaboring those options, which we have discussed previously, they include refinancing with secured debt, additional asset sales and other transactions as the capital markets and our cost of capital continue to evolve. We are confident in these options because of our recent successes generating highly profitable sales of hospital real estate, achieving attractive terms on the $2.5 billion of secured notes we issued a year ago, the euro portion of which are now trading at premiums implying a 5-ish percent rate and the successful 10-year secured financing of our German rehab portfolio in June of last year at a similar 5-ish percent coupon. Our carefully crafted covenants have provided plenty of headroom to be able to consider each of these potential options. As Ed mentioned, we announced a $150 million share repurchase plan last quarter that we used to repurchase a little less than 1% of our market cap through the end of the year. We also invested about $60 million in 2 attractively priced and well-performing post-acute rehabilitation facilities, which we intend to add to the respective master leases of 2 important long-term tenants. While these are relatively modest acquisitions, the acute and post-acute hospital real estate market continues to offer attractive growth opportunities, both in the U.S. and Europe that we will take advantage of as our cost of capital continues to improve. And with that, I will turn the call back over to the operator to queue any questions. Regina?

[Operator Instructions] Our first question will come from the line of Michael Diana with Maxim Group.

I'd like to talk a little about your facility recycling during the quarter. I think you mentioned you sold 6 small properties and a surprise to me anyway, bought 2 properties. So maybe you could talk about those 8 properties, but also just more in general, what your view is on the recycling.

Sure, Michael. But let me first take the opportunity to thank you for picking up coverage on us and the time you spent with us to fully understand the company and our business model, and we certainly look forward to working with you. So the 6 properties that we sold were smaller properties. They were properties that were underperforming for the rest of the portfolio. We will continue to look at opportunities like that going forward. But also, we're in a position now where we can go back into the acquisition mode. We'll do it very selectively. We believe that the 2 properties that we acquired are very good investment and the opportunity for us to continue to support our existing tenants.

Our next question will come from the line of John Kilichowski with Wells Fargo.

Maybe if we could just start on the Prospect sales. If you could just kind of help me source of uses. I think you gave some helpful color in the opening remarks, but maybe just to tie it all together. Could you talk about the sales proceeds from the assets that have closed, the expectations of the asset under contract and then maybe what's going to be above and beyond the DIP financing and where those proceeds will go?

So the only remaining transaction that's pending is the binding contract to acquire the Waterbury facility in Connecticut, and we expect that to close in this quarter. That will significantly finalize the major components of the Prospect bankruptcy. We expect proceeds that will come from that sale, along with collecting of the receivables that will probably take over the next 60 to 90 days, will fully pay the DIP financing. And as we announced previously, probably going back as many as 2 quarters, we've committed to a super secured DIP commitment that we may fund going forward that the proceeds from causes of action that is litigation that's being pursued by the litigation trust, we have first claim on those proceeds, and we remain highly confident, frankly, that the super secured DIP financing will be repaid from those proceeds.

That's helpful. And then maybe just jumping to your '26 rent target and the ramp from your legacy assets, legacy Steward assets, the $22 million that you got this quarter. I believe last quarter, we got some color on expectations looking forward. Are you able to provide any color on what you expect to receive in the first quarter of this year?

No, we're not yet giving guidance on quarterly or annual amounts for a couple of reasons. One is, as Kevin mentioned, we still have several fairly significant tenants that we are accounting for on the cash received basis. And so we continue to watch that rent ramp. It has ramped in accordance with the contract that we entered into with those tenants going on 18 months ago now. And I think we said in our press release this morning that virtually all of them are fully paid as we sit here today. Now I'll qualify that with the 2 very small tenants that in recent quarters, we've also called out roughly 3% of the total replacement rents are not yet paying rent. But nonetheless, and as Ed pointed out, we continue to expect through 2026, by the end of 2026, we'll be at an annualized run rate of cash collections exceeding $1 billion.

And John, I think just to further answer that question with Steve is that there was one payment that HSA made for -- that was received last quarter that was for the previous quarter. Kevin went through that. The next big jump will be when NOR starts paying rent in June, I believe it is.

Our next question will come from the line of Austin Wurschmidt with KeyBanc.

This is Vikram Garewal on for Austin. Just one for me. Can you provide us with some additional color on the Vibra restructuring? Specifically, what was previous and what is the new cash rent expected from Vibra?

No, we haven't detailed that out. I'll remind you for the last couple of years, we've referred to this tenant kind of vaguely as the 1% tenant that we've been restructuring. That was consummated in the fourth quarter, and therefore, the collection of $18 million of rent that was due, although not paid pending restructuring. And going forward, Vibra is a significantly stronger tenant for us. And I'll just again reiterate based on your question that there's no impact on previous rental revenue because we haven't been recognizing it because Vibra has been on the cash basis. I don't know if that addressed your question.

As a part of answering that question, Vibra refinanced all of their debt. So as Steve said, they're in a much better position today than they have previously been. A couple of their properties are actually now leased to Select Medical and rather than Vibra from our standpoint.

Our next question will come from the line of Michael Carroll with RBC Capital Markets.

Sorry. I wanted to stay on the Vibra transaction. I just wanted to confirm, in the press release, it sounded like the $32 million acquisition was leased to Vibra. I mean, did you buy that from Vibra? And if so, why was that included in this transaction?

We did buy it from Vibra, and it is a great facility that we feel very good about and glad to have had the opportunity to acquire.

Okay. And then the cash went to Vibra for that specific deal then?

Correct. And also, Mike, Just to clarify a little bit, the $18 million, we've actually had on our books, a significant portion of that since this time last year when Vibra made a deposit of $20 million. And of that, about half of it we held in reserve to apply to rent. So your point is well taken. Yes, we provided proceeds by virtue of acquiring this asset. But Vibra itself has put in probably upwards of $70 million over the course of this restructuring.

And Vibra actually used the proceeds from this sale to pay off debt that they had.

Okay. I mean, is there -- and maybe it's just because the transaction is pretty complicated. I know that we've been talking about the 1% tenant/Vibra for it seems like the past few years now. I mean, is there a reason why it took so long to get this done? And is there anything -- and I guess -- and back to your earlier comments, Steve, you said that you weren't recognizing any rent from Vibra. So did Vibra have 0 rent payment in fourth quarter outside of that $18 million payment, so it will be additive as you go into 1Q '26?

No, they were actually paying rent. This was just additional rent that they owed as well.

That had not previously been recognized.

The first part of your question, as I said, it was a total refinancing of Vibra's balance sheet. So there were multiple parties involved.

Our next question will come from the line of Mike Mueller with JPMorgan.

Yes. A couple of questions. I guess on the first one, for this acquisition and the other acquisition, can you talk about pricing, I guess, the cap rates and coverages? And then for the second question, maybe just a little bit bigger picture. I know you bought some stock back in the quarter, but you also went through all the debt maturities coming due over the next couple of years. How are you thinking about today kind of buybacks versus delevering?

So let me answer the first part of that, Mike. The coverage on both of these were very strong. The cap rates are also very attractive. As you know, it's not our policy -- it is our policy not to go and disclose each individuals on the various properties, but these are very strong both on the coverage and from our standpoint on the cap rate.

Going forward, Mike, on the balance sheet, we invested what, roughly $25 million in our own stock over the quarter, relatively modest amount. We'll continue to evaluate when it's appropriate to be in the market with the stock. We have multiple opportunities that I tried to summarize very briefly in my prepared remarks to address the upcoming maturities and have a high level of confidence that we'll have some attractive options for addressing that, obviously, beginning this year as we have the very, very low rate euro issuance coming due in October.

Our next question will come from the line of Vikram Malhotra with Mizuho.

I guess two ones. One, just bigger picture. You mentioned the acquisitions. I'm just wondering sort of as the portfolio stands today, whether it's just noncore or international, can you just talk about potential sales and give us an update on like how the buyer pool has shaped up? What sort of capital is still interested in owning hospital real estate?

So Vikram, if I understood your question correctly, there still continues to be a very strong market for people interested in acquiring our properties. We get calls often. But where we are today, we are much more likely to be in an acquisition mode than a disposition mode. We'll do dispositions as we review various items and think it's appropriate for us. But we are more in an acquisition mode.

And then I guess just on that acquisition point, just looking at the different, I guess, sub-asset classes, behavioral, leaving hospital aside, I'm wondering sort of the opportunity set when you look at post-acute and behavior. Are there any specific focus areas, any types of assets? Just -- and I'm wondering just if you look to sort of maybe -- I don't want to call it expand, but maybe shift the focus in terms of types of health care/hospital settings in terms of acquisitions?

Sure. Our focus will continue to be general acute care, which it has been through the vast majority of the life of medical properties. But we will continue to look at post-acute, but that's primarily almost exclusively in the rehab sector, which we've been very strong on since the inception of the company. We're still big believers in behavioral. In the U.S., behavioral softness has not come from lack of demand, but lack of ability to have nurses and staff at each of the facilities. In the U.K., it's much more of a funding issue with NHS. If you follow the U.K., you'll know that the need is there. The desire is there. It's just more of a political funding standpoint. Still believers in both sectors, but probably the biggest acquisitions we'll make today will be in general acute care, followed by post-acute care being rehab.

Our next question will come from the line of Farrell Granath with Bank of America.

This is Farrell Granath. I just wanted to also dig in a little bit more on your acquisitions. Just when thinking about Europe versus the U.S., especially now that we've seen some pressures just on public pay with headlines and reimbursement rates. Does that weigh in on how you're evaluating your pipeline? Or can you give a quantifiable qualitative of how you think about your pipeline in both regions?

That's a good question, Farrell. And as you know, we're roughly 50-50 now, 50% of the United States and 50% outside of the United States. Still believe that the United States has the best health care in the world, and we obviously will continue to focus here, but it is less political outside of the United States. And so we like our investments outside of the United States very strongly. We're in 9 different countries. We'll continue to invest in the countries that we're in, and we'll continue to look for expansion in places in Europe and places where we are not. We still feel very good about where health care in general is in the United States and feel very good that -- we feel very strong that there'll continue to be small ups and downs, but we don't think there'll be any big ups and downs in the reimbursement in the United States.

And I guess also on that, when thinking about the people who are selling, are these in the properties that you're acquiring, are these marketed deals? Are you having reverse inquiries? Are these also just operators that you have past business with? Just curious how that pipeline is building out.

Yes, it's probably 50% or slightly more of people that we've already done business with, our existing tenants or tenants that had formally been our tenants. There's still a very strong pipeline of people who know who we are, that are looking to make acquisitions and to use our type of funding for those acquisitions. I would say most of the deals that come to us outside of our existing tenants are marketed transactions.

Farrell, I'll just point out in addition, just a little bit, we did a pretty limited amount, $60 million in total. That's a result of actually many quarters of negotiation and exploration. So it's not just something that generates just in the quarter. We're able to be and we are being very selective. Right now, again, we still want to see our cost of capital improve. And the point I think we want to make is as that happens, there is a pretty vibrant market. The fact that we did only $60 million in 2 transactions is not indicative of the size and vibrancy of the market. We could have -- I'll put it this way, there were available many more transactions that we could have done that we evaluate. But again, we're being very selective.

Our next question is a follow-up from the line of Michael Carroll with RBC Capital Markets.

I guess, Ed or Rosa, I wanted to follow up and circle back on the comments related to HSA. Can you remind us, is that operator cash flow positive today with the rent fully ramped? I know that you indicated that last quarter that their coverage was above 1 on the fully rent ramps, but obviously, it takes time for cash collections to pick up to equal that.

Yes. The cash collections, as Rosa pointed out, are not where any of us would like to see them. However, if you look at this from where they came from, not just as a typical start-up, they actually started out in the whole picking up the Steward properties. We're very pleased with where they are. We obviously want them to be much better. We talked about there being able to -- in the second quarter that we believe that they'll be totally independent acquiring the MEDITECH license and all that goes along with that, taking great steps in the cash collections and we hope and feel good about their ability to do better than that. Where they are right now is still continuing to be at 1x full rent coverage.

Okay. And then just last one for me. I mean, does HSA or NOR need to be -- does MPW needing to provide them working capital loans still? Or have they weaned off of those specific loans and are able to work with what they have on their own balance sheets?

Yes. We have not provided any additional working capital loans for either one of those entities. We have provided HSA with funding to help them acquire the MEDITECH license and with NOR, the last fundings that we were participating in those were left over Prospect bills.

And I will now turn the call back over to Ed Aldag for closing comments.

Regina, thank you very much. And again, thank all of you for listening today. And as always, if you have any additional questions, please don't hesitate to reach out to us. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.