Medical Properties Trust, Inc. common stock

Good morning and welcome to the Q1 2020 Medical Properties Trust Earnings Conference Call. It is my pleasure to turn today's call over to Charles Lambert, Treasurer and Managing Director. Mr. Lambert, the floor is yours.

Good morning. Welcome to the Medical Properties Trust Conference Call to discuss our first quarter 2020 financial results. With me today are Edward K. Aldag, Jr., Chairman, President, and Chief Executive Officer of the company, and Steven Hamner, Executive Vice President and Chief Financial Officer. Our press release was distributed yesterday and furnished on Form 8K with the Securities and Exchange Commission. If you did not receive a copy, it is available on our website at www.medicalpropertiestrust.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 this 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 security 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 www.medicalpropertystrust.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. Good morning, and thank all of you for joining us today for our first quarter earnings call. I want to address our portfolio in the coronavirus COVID-19 crisis. But first, allow me to acknowledge the incredible work and sacrifices the healthcare workers all over the world have made to keep the rest of us healthy and safe. Many of these workers risked their own lives to save others. In fact, in places like Italy, where we have eight hospitals, many of these healthcare workers became victims to the virus themselves. I'd like to offer our sincere gratitude to these workers and sympathy to all of their families. This pandemic has brought an unprecedented focus on healthcare access, delivery, and particular hospitals. Never has it been more apparent than it is today of the importance of hospitals worldwide. Our hearts have been broken by the tragic stories, pictures, and videos of devastating repercussions of this deadly virus. And our hearts have been warmed as we have seen the good in mankind as individuals, businesses, and governments have come together to assist those impacted physically, financially and mentally by this terrible disease. We are so proud of all the healthcare providers and workers, not only across the nearly 400 NPT-owned hospitals, but also throughout the world as they've battled this pandemic and sacrificed sometimes with their own lives. Our portfolio of hospitals and hospital operators remain financially strong. They continue to meet their financial obligations. For April, NPT collected more than 96% of our rental revenue, and based on the reports from our operators and information we've been able to review, we expect this trend to continue. Across our portfolio, our hospitals have treated thousands of COVID-19 patients. Following government directives, all hospitals, including those in NPT's portfolio, stopped most if not all elective procedures. Please keep in mind that elective procedures does not mean that they are medically unnecessary, just that they are ones that can be delayed. These procedures will still need to be performed. Our operators across the globe expect that there will be a large backlog of surgeries that will need to be done once we all come out of the pandemic crisis. Our operators have been able to right size their staffs and operations to account for this temporary deferral. Both internationally and domestically, we have seen our post-acute care providers step forward to assist acute care hospitals by offering their value-add capabilities to provide for the transfer of certain patients from acute care settings, thereby creating additional capacity for COVID-19 patients in the acute care facilities. We have also seen operators work in close alignment with their respective federal and local authorities. to ensure appropriate coordination in the provisions of healthcare services during this time of crisis. One example of this has been in England where private healthcare providers like MPT portfolio operators Circle and BMI and Ramsey have reached a temporary agreement with the National Health Services to fully align operations in both the public and private sector in order to ensure that the capacity needs are accomplished. With this alliance, England can arrange for the appropriate allocation of resources, both human and material, to the desired points of care. NPT is absolutely supportive of this extraordinary cooperation agreement. As a part of this agreement by the NHS is to assure that operating calls to the hospitals are met, including but not limited to facility rent. This same scenario is being played out with our operators in Spain, Italy, and Australia. Another example is in the hard-hit northern region of Italy, where NPT's portfolio operator, PDM, and other private and public hospital systems have been working together to meet the high demand for patient care. These collaborative efforts will be compensated as the Italian government issued a decree law indicating the possibility for Italian regions to increase reimbursement for all healthcare operators, including the private ones that cared for COVID-19 patients, or took non-COVID-19 patients or simply made their beds available by delaying non-life-threatening procedures at the request of the government. These increases would be exempt from the limit on healthcare costs set by regulators previously issued. In Australia, HealthScope continues to work with the Commonwealth, states and territory governments to secure arrangements for providing healthcare services to respond to COVID-19. In Switzerland, our operator, the Swiss Medical Network, worked very closely with the federal government and each canton to develop and implement a plan for dealing with this virus. They expect to be back to full operations in late May or early June. In Germany, our largest German operation, Median, has performed superbly. Median expects their overall operations to remain strong throughout the year. Andre and his team at Median have done an outstanding job. Adjusting to the COVID-19 virus. During the height of the crisis, I was in daily contact with the CEOs of all of our largest operators. I cannot stress enough how proud I am of each of them on how they've handled this pandemic and cooperation that they offered to NPT and to me personally. As most of you know, on April the 10th, 2020, Health and Human Services announced the immediate release of $30 billion of the $100 billion public health emergency fund provided for by the CARES Act. The fund reimburses eligible healthcare providers for expenses and lost revenue directly attributable to COVID-19. These funds are being released in tranches. The initial $30 billion in immediate relief funds have been delivered to all facilities and providers that received Medicare fee-for-service reimbursements in 2019. To date, our top five operators have received almost $400 million in stimulus funds. Additionally, they've received almost $2.2 billion in Medicare advances. Plans have been announced to distribute a portion of the remaining $70 billion. However, operators do not yet know the amount of funding that they will receive from this round of stimulus. Additionally, Congress and the President have recently agreed to another $75 billion of funding to providers. Let me now provide a quick update on the lease coverage for our portfolio for the fourth quarter. Remember that we report one quarter in arrears, so these numbers represent the quarter ending 12-31-19. We added a net of one additional facility to our same store portfolio. Our same store portfolio EBIDARM coverage for the trailing 12 months Q4 2019 is essentially flat at 2.7. Same store acute care EBIDARM coverage is 2.93, which represents a slight decline year-over-year. IRF EBITDARM coverage is 2.06, which represents a 4% increase year-over-year. And LTCH EBITDARM coverage is 1.93, which represents a 19% increase year-over-year. The lease coverages for the first quarter 2020 will be irrelevant when they are reported. We will obviously look for other ways to show how our portfolio and hopefully the world is back up and running. Remember what I said earlier, all of the elective surgeries and procedures that have been postponed are stacking up. These are procedures that are still medically necessary and in need of getting done. The volume and more will be there when the world is able to focus on providing healthcare without the threat of COVID-19. In January of this year, we announced the completion of our largest single investment to date of almost $2 billion in 30 UK hospitals with Circle BMI. As a part of the review and approval process of UK's Competition and Markets Authority, Circle is expected to the best its Bath and Birmingham hospital operations. Both of these hospitals are in new state-of-the-art facilities that NPT owned prior to the BMI acquisition, and we are confident in the ability to find suitable replacement operators. We continue to have a large active pipeline of projects we are working. As a part of the COVID-19 crisis, Several new opportunities have come to light. We are confident that we will be able to act on these opportunities, but at this time do not believe it would be prudent to try to predict when these will occur. We remain very bullish on NPT and hospitals throughout the world. As the first and only pure play hospital REIT, NPT has always seen and understood the importance that hospitals play as the keystone and foundation of healthcare delivery systems throughout the world. I've always said it is impossible to imagine our healthcare systems without hospitals and at times like this I don't think anyone can. At this time I'll let Steve go over the specifics of our financial performance and our very strong balance sheet. Steve?