UHT's Q3 Net Income Edges Up, Nine-Month Profit Dips Amid Rising Costs

TL;DR

**UHT's Q3 looks stable, but the nine-month dip and shrinking equity mean investors should be cautious about long-term growth.**

AI Summary

Universal Health Realty Income Trust (UHT) reported a slight increase in net income for the three months ended September 30, 2025, reaching $4.016 million, up from $3.997 million in the prior year period. However, net income for the nine months ended September 30, 2025, decreased to $13.285 million from $14.573 million in the same period of 2024. Total revenues for the three-month period increased to $25.302 million from $24.494 million, driven by higher non-related party lease revenue and other revenue. For the nine-month period, total revenues saw a marginal increase to $74.718 million from $74.369 million. Depreciation and amortization expenses rose to $7.903 million for the quarter and $21.742 million for the nine months, up from $7.009 million and $20.624 million respectively. The company's total equity decreased to $158.574 million as of September 30, 2025, from $179.541 million at December 31, 2024, primarily due to cumulative dividends of $30.711 million and an unrealized derivative loss on cash flow hedges of $4.283 million. Lease revenue from UHS facilities accounted for approximately 24% of consolidated revenues for both the three and nine months ended September 30, 2025.

Why It Matters

This filing reveals UHT's mixed financial performance, with a slight quarterly net income gain but a notable nine-month decline, which could signal challenges for investors seeking consistent returns. The decrease in total equity by over $20 million, largely due to dividends and derivative losses, impacts the company's financial stability and future growth capacity. The significant reliance on Universal Health Services (UHS) for 24% of its consolidated revenues highlights a concentration risk, making UHT's performance closely tied to its primary tenant's health. Competitors in the healthcare REIT space might see this as an opportunity to gain market share if UHT's financial pressures persist.

Risk Assessment

Risk Level: medium — The risk level is medium due to a decrease in net income for the nine months ended September 30, 2025, to $13.285 million from $14.573 million in 2024, representing an 8.8% decline. Additionally, total equity decreased by $20.967 million from $179.541 million at December 31, 2024, to $158.574 million at September 30, 2025, partly driven by an unrealized derivative loss on cash flow hedges of $4.283 million for the nine-month period.

Analyst Insight

Investors should closely monitor UHT's dividend sustainability given the decrease in total equity and the nine-month net income decline. Evaluate the impact of rising depreciation and amortization expenses on future profitability and consider the concentration risk associated with UHS as a major tenant.

Financial Highlights

debt To Equity

N/A

revenue

$74.718M

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

$13.285M

eps

N/A

gross Margin

N/A

cash Position

N/A

revenue Growth

+0.47%

Revenue Breakdown

Key Numbers

• $4.016M — Net income for Q3 2025 (Increased from $3.997M in Q3 2024)
• $13.285M — Net income for nine months ended Sept 30, 2025 (Decreased from $14.573M in the same period of 2024)
• $25.302M — Total revenues for Q3 2025 (Increased from $24.494M in Q3 2024)
• $74.718M — Total revenues for nine months ended Sept 30, 2025 (Increased from $74.369M in the same period of 2024)
• $7.903M — Depreciation and amortization for Q3 2025 (Increased from $7.009M in Q3 2024)
• $21.742M — Depreciation and amortization for nine months ended Sept 30, 2025 (Increased from $20.624M in the same period of 2024)
• $158.574M — Total Equity as of Sept 30, 2025 (Decreased from $179.541M at Dec 31, 2024)
• $4.283M — Unrealized derivative loss on cash flow hedges (Contributed to the decrease in total equity for the nine months ended Sept 30, 2025)
• 24% — Percentage of consolidated revenues from UHS facilities (Consistent for both three and nine months ended Sept 30, 2025 and 2024)
• $30.711M — Cumulative dividends for nine months ended Sept 30, 2025 (Contributed to the decrease in total equity)

Key Players & Entities

• UNIVERSAL HEALTH REALTY INCOME TRUST (company) — registrant
• Universal Health Services, Inc. (company) — related party and advisor
• UHS of Delaware, Inc. (company) — wholly-owned subsidiary of UHS and UHT's advisor
• McAllen Medical Center (company) — UHS acute care hospital facility
• Aiken Regional Medical Center (company) — acute care hospital facility acquired by UHT
• Canyon Creek Behavioral Health (company) — behavioral health facility acquired by UHT
• Wellington Regional Medical Center (company) — hospital property leased to UHS subsidiary
• Catholic Health Initiatives-Iowa (company) — joint venture partner for Clive Behavioral Health Hospital
• New York Stock Exchange (regulator) — exchange where UHT shares are registered
• SEC (regulator) — governing body for financial filings

FAQ

Risk Factors

• Dependence on UHS Facilities [medium — financial]: Lease revenue from UHS facilities accounted for approximately 24% of consolidated revenues for the nine months ended September 30, 2025. A significant downturn or change in the relationship with UHS could materially impact UHT's financial performance.
• Equity Reduction due to Dividends and Derivatives [medium — financial]: Total equity decreased to $158.574 million as of September 30, 2025, from $179.541 million at December 31, 2024. This was primarily driven by cumulative dividends of $30.711 million and an unrealized derivative loss of $4.283 million, indicating a reduction in the company's net asset value.
• Rising Depreciation and Amortization [low — operational]: Depreciation and amortization expenses increased to $7.903 million for Q3 2025 and $21.742 million for the nine months ended September 30, 2025. This rise from $7.009 million and $20.624 million respectively suggests increased asset wear or new asset acquisitions impacting profitability.
• Interest Rate Sensitivity [medium — market]: The company utilizes cash flow hedges, as evidenced by the $4.283 million unrealized derivative loss. Changes in interest rates can impact the effectiveness and valuation of these hedges, potentially affecting comprehensive income and equity.

Industry Context

Universal Health Realty Income Trust operates in the healthcare real estate sector, which is characterized by long-term leases and tenant concentration. The industry is influenced by healthcare utilization trends, regulatory changes affecting healthcare providers, and interest rate environments impacting real estate valuations and financing costs.

Regulatory Implications

As a healthcare REIT, UHT is indirectly affected by healthcare regulations impacting its tenants' operations. Changes in reimbursement policies or operational requirements for healthcare facilities could affect tenant financial health and their ability to meet lease obligations.

What Investors Should Do

1. Monitor UHS relationship and revenue concentration.
2. Analyze the drivers of equity decrease.
3. Evaluate the trend in depreciation and amortization.

Key Dates

• 2025-09-30: End of Q3 and Nine-Month Period — Reporting period for the financial results discussed in the 10-Q, showing mixed performance with increased quarterly revenue but decreased year-to-date net income.
• 2025-12-31: Previous Fiscal Year End — Baseline for comparison of total equity, which has decreased significantly by September 30, 2025.

Glossary

Non-related party lease revenue

Rental income generated from leases with entities that are not affiliated with Universal Health Realty Income Trust. (A primary driver of UHT's revenue growth in the recent quarter.)

Cumulative dividends

The total amount of dividends paid out to shareholders over a period, which reduces retained earnings and total equity. (A significant factor contributing to the decrease in UHT's total equity.)

Unrealized derivative loss on cash flow hedges

A loss recognized on financial instruments (derivatives) used to hedge against future cash flow fluctuations, where the loss has not yet been settled in cash. (Contributed to the reduction in UHT's total equity and indicates exposure to market risk.)

Depreciation and amortization

The systematic allocation of the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. (An increase in these expenses can impact net income and reflects the usage or obsolescence of company assets.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, Universal Health Realty Income Trust experienced a decrease in net income to $13.285 million from $14.573 million in the prior year, despite a marginal increase in total revenues to $74.718 million from $74.369 million. Total equity saw a significant decline from $179.541 million at year-end 2024 to $158.574 million as of September 30, 2025, primarily due to substantial dividend payments and unrealized derivative losses. Depreciation and amortization expenses also rose, indicating increased asset-related costs.

Key Financial Figures

• $0.01 — stered Shares of beneficial interest, $0.01 par value UHT New York Stock Exchan
• $4 — d 2024, respectively, and approximately $4 .1 million for each of the nine-month p

Filing Documents

• uht-20250930.htm (10-Q) — 2321KB
• uht-ex31_1.htm (EX-31.1) — 12KB
• uht-ex31_2.htm (EX-31.2) — 12KB
• uht-ex32_1.htm (EX-32.1) — 9KB
• uht-ex32_2.htm (EX-32.2) — 8KB
• 0001193125-25-272382.txt ( ) — 8960KB
• uht-20250930.xsd (EX-101.SCH) — 1359KB
• uht-20250930_htm.xml (XML) — 1387KB

FINANCIAL INFORMATION (unaudited)

PART I. FINANCIAL INFORMATION (unaudited) Item 1.

Financial Statements

Financial Statements Condensed Consolidated Statements of Income—Three and Nine Months Ended September 30 , 2025 and 2024 3 Condensed Consolidated Statements of Comprehensive Income—Three and Nine Months Ended September 30, 2025 and 2024 4 Condensed Consolidated Balance Sheets—September 30, 2025 and December 31, 2024 5 Condensed Consolidated Statements of Changes in Equity—Three and Nine Months Ended September 30, 2025 and 2024 6 through 7 Condensed Consolidated Statements of Cash Flows—Nine Months Ended September 30, 2025 and 2024 8 Notes to Condensed Consolidated Financial Statements 9 through 19 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 20 through 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 through 31 Item 4.

Controls and Procedures

Controls and Procedures 31

OTHER INFORMATION

PART II. OTHER INFORMATION 32 Item 1A.

Risk Factors

Risk Factors 32 Item 5. Other Information 32 Item 6. Exhibits 32

SIGNATURES

SIGNATURES 33 This Quarterly Report on Form 10-Q is for the quarter ended September 30, 2025. In this Quarterly Report, "we," "us," "our" and the "Trust" refer to Universal Health Realty Income Trust and its subsidiaries. As disclosed in this Quarterly Report, including in Note 2 to the condensed consolidated financial statements—Relationship with Universal Health Services, Inc. ("UHS") and Related Party Transactions , a wholly-owned subsidiary of UHS (UHS of Delaware, Inc.) serves as our Advisor pursuant to the terms of an annually renewable Advisory Agreement dated December 24, 1986, and as amended and restated as of January 1, 2019. The Advisory Agreement expires on December 31 of each year, however, it is renewable by us, subject to a determination by our Trustees who are unaffiliated with UHS, that the Advisor's performance has been satisfactory. The Advisory Agreement was renewed for 2025 with the same terms as the Advisory Agreement in place during 2024 and 2023. Our officers are all employees of UHS through its wholly-owned subsidiary, UHS of Delaware, Inc. In addition, five of our hospital facilities are leased to wholly-owned subsidiaries of UHS, one of our hospital facilities is leased to a joint venture between a wholly-owned subsidiary of UHS and a third party, and subsidiaries of UHS are tenants of nineteen medical/office buildings or free-standing emergency departments, that are either wholly or jointly-owned by us. Any reference to "UHS" or "UHS facilities" in this report is, except as the context otherwise requires, referring to Universal Health Services, Inc.'s subsidiaries, including UHS of Delaware, Inc. In this Quarterly Report, the term "revenues" does not include the revenues of the unconsolidated limited liability companies ("LLCs") in which we have various non-controlling equity interests ranging from 33% to 95%. As of September 30, 2025, we had investments in four jointly-owned LLCs/LPs. We currently account for our share of the inc

Financi al Information

Part I. Financi al Information Item I. Financ ial Statements Universal Health Realty Income Trust Condensed Consolidated Statements of Income For the Three and Nine Months Ended September 30, 2025 and 2024 (amounts in thousands, except per share information) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Revenues: Lease revenue - UHS facilities (a.) $ 8,367 $ 8,248 $ 25,075 $ 25,366 Lease revenue - Non-related parties 14,777 14,342 43,676 43,188 Other revenue - UHS facilities 233 242 699 682 Other revenue - Non-related parties 577 305 1,218 1,056 Interest income on financing leases - UHS facilities 1,348 1,357 4,050 4,077 25,302 24,494 74,718 74,369 Expenses: Depreciation and amortization 7,903 7,009 21,742 20,624 Advisory fees to UHS 1,414 1,386 4,169 4,093 Other operating expenses 7,591 7,609 22,535 22,115 16,908 16,004 48,446 46,832 Income before equity in income of unconsolidated limited liability companies ("LLCs") and interest expense 8,394 8,490 26,272 27,537 Equity in income of unconsolidated LLCs 438 300 1,215 956 Interest expense, net ( 4,816 ) ( 4,793 ) ( 14,202 ) ( 13,920 ) Net income $ 4,016 $ 3,997 $ 13,285 $ 14,573 Basic earnings per share $ 0.29 $ 0.29 $ 0.96 $ 1.06 Diluted earnings per share $ 0.29 $ 0.29 $ 0.96 $ 1.05 Weighted average number of shares outstanding - Basic 13,828 13,807 13,818 13,799 Weighted average number of shares outstanding - Diluted 13,874 13,849 13,860 13,835 (a.) Includes bonus rental on McAllen Medical Center, a UHS acute care hos pital facility of $ 895 and $ 765 for the three-month periods ended September 30, 2025 and 2024, respectively, and $ 2.6 million and $ 2.3 million for the nine-month periods ended September 30, 2025 and

View Full Filing

View this 10-Q filing on SEC EDGAR