Leadership at National Health Investors said they are cautiously optimistic for the future, with operators seeing an uptick in lead sales and move-ins alongside a rollout of vaccine clinics across its communities for the first financial quarter.
Its skilled nursing segments, which represent more than 50 percent of its cash revenue in addition to entrance fees for the quarter, are “performing well,” Chief Executive Erik Mendelsohn said in the company’s earnings call on Tuesday.
That’s despite rent collection continuing to deteriorate and the acknowledgement that tenants will need more assistance across all operators as the pandemic extends into 2021.
The Murfreesboro, Tenn.-based real estate investment trust reported an decrease in revenue by less than a percent to $80.9 million, compared to $83.1 million for the first quarter of 2020.
NHI reported an adjusted net income of $0.78 cents a share for the quarter ended March 31, a decrease of 43 percent from $1.37 a share in the same period a year earlier.
CFO John Spaid attributed this drop to a $21 million gain on the sale of real estate assets, $4.2 million in rent deferrals for the quarter, and a $3.6 million increase in its non-cash, stock-based compensation expense.
“The industry is starting to show green shoots and we expect some recovery in 2021,” added Spaid during the earnings call. “But the next several months will be difficult. NHI is well positioned to weather the storm with multiple levers at our disposal to preserve our conservative capital structure and set the company up for longer term growth. While this pandemic has had a disproportionately negative impact on operators caring for the senior population, we do not believe the damage is permanent.”
NHI’s skilled nursing portfolio represents 27 percent of its annualized cash revenue, Chief Investment Officer Kevin Pascoe said during an earnings call. Operating skilled nursing partners include: National Healthcare Corp., Ensign Group, Health Services Management and Senior Living Management Corp.
Pascoe said anchor tenants NHC and Ensign make up 13 and 8 percent of annualized cash revenue, respectively.
“The government support for the skilled nursing industry has been tremendous and we expect that there will be more support from the remaining $24.5 billion in the (CARES Act) Provider Relief Fund as well as individual state support following significant funds received under the American Rescue Plan,” added Pascoe.
“We expect that the path to a more normal operating environment will be uneven and is likely to be a multi-year process, which will make 2021 a difficult year for NHI, as we help our tenants bridge the gap to full occupancy and margin recovery,” Mendelsohn said.
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