Medical Properties Trust, Inc. common stock

Q1 2021 Medical Properties Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Mr. Charles Lambert. Thank you. Please go ahead.

Thank you. Good morning. Welcome to the Medical Properties Trust conference call to discuss our first quarter 2021 financial results. With me today are Edward K. Albag, Jr., Chairman, President, and Chief Executive Officer of the company, and Stephen Hamner, Executive Vice President and Chief Financial Officer. Our press release was distributed this morning 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 medicalpropertystrust.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 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, and thank all of you for listening in today for the Medical Properties Trust first quarter earnings call. 2021 is shaping up to be another fantastic year for MBT. More on that in just a few minutes. But before I move on, I'd like to once again express our appreciation for all of our hospital operators and the nurses and doctors and other healthcare workers across the globe that have fought this deadly disease. They face the dangers head on like a fireman running into a burning building while simultaneously saving hundreds of thousands of and maybe millions of lives. We remain in all of their bravery and commitment to their patients. The pandemic has taught the world a lot, and in particular for our industry, there is no second guessing the need for hospitals, especially acute care hospitals. The world could not have survived without the hospital industry this past year. At least in our lifetimes, people will continue to have to come to hospitals for their acute needs. The advancements in outpatient services and particularly in telemedicine have helped to funnel patients to hospitals. Today, because of the technological advances in services such as telemedicine, hospitals are seeing a whole new group of patients they wouldn't have seen before. In April of May and May of last year, we knew that as soon as hospitals opened back up, the patients would come back and come back quickly. This wasn't a choice of going out to dinner or to a movie. This was life and death. As has been reported throughout the industry, hospitals are performing well with EBITDAs back at 2019 levels or above. Our portfolio is no different. Like every industry, hospitals were shut down for basically a quarter last year. That period makes looking at trailing 12 months coverage truly irrelevant. What matters is how hospitals are performing now. Therefore, I'm going to compare fourth quarter 2020 to fourth quarter 2019. But please note the downward skewed seasonal effect of only including the fourth quarter is not totally comparable to an annualized coverage over a trailing 12 months. Now excluding all grants and advances, the acute care hospital segment of our portfolio was 2.3 times coverage in the fourth quarter 2020 compared to 2.72 times for the fourth quarter 2019. For IRFs, it was 2.01 times compared to 2.23 times. And for LTACs, it was an amazing 2.47 times compared to 1.92 times in 2019. These are all truly remarkable numbers, an amazing recovery from the depths of COVID. Now, even those coverages don't tell the complete story because they include the rental increases on all of our leases. So just comparing EBITDA again, excluding all grants for those same periods, our operators were only down 6% in the fourth quarter of 2020 compared to the fourth quarter of 2019. Looking forward, we have some partial results for a small number of our operators for January and February. And like the public company hospitals that have already reported, our operators saw a softer January and February from a utilization standpoint. This has been primarily due to the harsh winter storms in that time period and the very light flu season the world has seen. We are hearing and getting reports that the numbers are back up in March. On the acquisition front, as we mentioned on last quarter's call, 2021 started off with a great momentum with our announced 800 million pounds priory acquisition, which significantly expands our presence in the behavioral health space with the leading behavioral health provider in the UK. Also during the first quarter of 2021, we continue to expand our relationship with our hospital operator in Switzerland, the Swiss Medical Network. with an additional investment of approximately $158 million. You may recall Swiss Medical Network is the second largest private operator in Switzerland. We started our relationship with the Swiss Medical in early 2019. Since that time, we have executed multiple accretive transactions, bringing our total investment in these Swiss organizations to $1.3 billion. We've also increased our investment in Steward by an additional $335 million investment, which provides strong returns and additional opportunities with Steward. Since the beginning of 2020, we have successfully executed approximately $5 billion in transactions. Our active pipeline not only continues to be strong, but continues to grow. We expect to be able to make some additional exciting announcements late in the first half of this year and early part of the second half. During 2020, we added approximately 35 people to our corporate team. We have expanded our offices in Australia and Luxembourg. We're in the process of moving our offices in New York to a new location where we can add more staff there. We also expect to staff an office in London with people who are currently in Luxembourg. We have worked very well, mostly remote, for a little over a year now. Our Birmingham offices have been revamped, and we are ready to bring everyone back as soon as it's safe and prudent to do so. We are well positioned to handle not only the remarkable growth we've had over recent years, including 2020, but also the growth we expect in 2021 and beyond. I will now ask Steve to go through some specific financial reviews before we open it up to questions.