Thank you for standing by. My name is John and I will be your conference operator today. At this time, I would like to welcome everyone to the Medical Properties Trust's second quarter 2025 earnings conference call. All lines available 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 tarwin again thank you 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 medical properties trust conference call to discuss our second quarter 2025 financial results with me today executive vice president and chief financial officer senior vice president managing director as if you did not receive a copy it is available to today's call which you can access and make projections that may be considered forward. These forward-looking statements are subject to known and unknown risks, uncertainties, and other factors to differ materially from those expressed in all non-GAAP financial measures to the most directly comparable GAAP measures.

In early July, you need for NPT's business. NPT's objective is committed today as these that they rely on. Shifting to a few important new tenants, encouraging performance increasing in cash revenue from these at least $17 million by the third quarter. In fact, three of these new announced a transaction, an important demonstration of investor and further validation of our ability to access low-cost capital. With steady contributions from our stabilized portfolio and a rapidly ramping portfolio, we're confident in our ability to reach total annualized cash rent of more than $1 billion by year-end 2026.

Thank you, Ed. Turning now to some highlights from across our diverse portfolio of operators around the world. Overall, our tenants continue to report growing admissions and surgical volumes, translating to increasing EBIT-DARM coverage ratios year-over-year. I will begin with our international portfolio. Circle remains focused on being the UK's most innovative and technologically advanced hospital provider with significant investments in robotics and AI. Circle's trailing 12-month EBITDA coverage continued to increase in the second quarter year over year. Independent mental health care provider in the UK has maintained steady performance, acuity, and EBITDA coverage is NHS England's recently announced 10-year health plan, which includes commitments for mental health services. More integrated, inclusive, and shifting to continental Europe. In Germany, Median has delivered excellent year-over-year improvements in revenue and earnings, driven by strong occupancy trends and increasing performance drove a competitive and security. EBT increased its equity investment in the infracourse of approximately 50 million Swiss francs. Inclusive of a 25 million EBIT capital market today in the newly opened 21% year-over-year revenue growth driven by significant expansion of its outpatient network and integration of new sites. Turning to the U.S., Ernest Health EBIT-DARM coverage increased to 2.3 times, sustaining a trend of sequential quarterly increases. Legacy IRFs are delivering impressive results with May 2025 exceeding previous quarters. Ernest continues to execute an action plan establishing inpatient rehab units within its LTAC. LifePoint Health again reports strong top-line revenue growth driven by increased admissions, particularly economizing 12-month admissions with EBIT-DARM cutting initiatives, 1% higher than the same period in 2024. Successful physician recruitment efforts have led to recoupment of lost surgical volumes, which are outpacing 2024 volumes. In Louisiana, Glenwood's discharges are almost 11% higher than the same period in 2024, and the local team is focused on opening additional beds as the volume demands. And at St. Joseph Hospital in Texas, HSA's effective physician recruitment efforts have resulted in discharges that are back in line with surgical volumes are 3% ahead of 20%. Honor Health in the Phoenix metro area has been focused on executing its self-funded CapEx strategy and upgrading facilities ahead of anticipated volume recovery to join the medical staff. Quorum Health is now paying 100% of its missions and surge importantly. The Quorum team is focused on ramping up OB services, including the neonatal intensive summary our transitional portfolio is quickly ramping performance and rent payments as mpt's portfolio significant cash to continue to increase of which validates the hospital beginning in

october being 100 percent of fully ramped rent 60 million dollars on attracted annualized cash 60 million dollars we have collected all but three percent of july second quarter interest expenses fully loaded for the incremental cost of the two and a half billion dollars in your quarter basis substantially offset that incremental and all else equal, and there is no assurance that all else will remain equal. As we go into the third quarter, the expected first should more directly draw just a few observations repeats from previous quarters. The second consecutive quarter, we completed a substantial refinance most recently with the previously announced secured refi of our German joint venture. Two inarguable conclusions are eloquent. Assets have not only retained but increased their values, sophisticated global institutional investors and lenders, completed detailed physical and financial diligence, including independent appraisals at February issuance that had a blended rate of slightly less than 8% and an underwritten to be attractive underwritten 60% to many analysts of the 10-year term. This was a competitive process with an outcome that continues to dim a market for wealth proving that MPT has multiple million dollar sale in the second quarter of a standalone LTAC at an amount close priced at amounts near or in excess of resilience of our underwriting in maintaining the value spending sales will benefit our prospect virtually every major decision we have made over the last year has been based on increasing our financial flexibility decisions to sell assets retenant valuable hospital real estate with carefully attenuated cash we continue to execute clearly demonstrated the opportunities for further debt refinancing and as we continue to execute and grow earnings further reduction in our cost will continue to evaluate the best approach and use of these options at the appropriate turn the call back to the operator thank you as a reminder to everyone if you would like to ask a question that is to press star one on your telephone keypad please submit yourself to one question and one follow-up we will pause for a moment to compile the Q&A roster.

Thank you.

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

Yeah, thanks. Can you guys provide some color on HSA's performance and how confident are you that that rent ramp will occur as expected? I guess when or have they already started paying cash rents?

I guess when does that specifically commence in your lease agreement with them oh Mike you must have missed the early part of the call Rosa went over in great detail the improvements that they've made in all of the hospitals that they've taken over and they have are you still confident that they can that can ramp up as is written in lease yes we are very impressed with what they've done with our previously operating at Stewart that left during the bankruptcy have come back and we believe they're doing a good job.

Okay, and then, Ed, I guess in the bankruptcy filings with Steward, there was a claim from a lender that HSA was in default on a loan. I mean, it sounds like that issue was resolved. I mean, are they still in default on that loan, or can you kind of describe HSA's credit and if they're on default on any of their issues outside of NPW?

Well, Mike, that was well described in the various court filings. Just to remind you, when they took over from HSH, longer to repay that because the steward, the people that were running steward, had nothing to do with operations.

No, I appreciate that. And then just lastly for me, and I know that you guys discussed this a little bit on the prepared remarks, but can you talk a little bit about the prospect recovery process? I know the PHP proceeds were lower than expected.

Was that impaired in your financial statements in the other bucket?

And I guess, can you talk about what's the timeline of the expectations of if NPW could collect anything in addition to, I guess, those PHP loans kind of in the prospect bankruptcy case?

So, Mike, again, if you follow through the bankruptcy of this particular entity, We reached the globe here, January, February. The PHP...

Appreciate it.

Your next question comes from the line of Michael Mueller with JP Morgan. Please go ahead.

Yeah, hi. I jumped on late, too, so I have a feeling a lot of what I was going to ask has already been covered. But just in terms of the asset sales that you mentioned, I think you mentioned about $100 million. Is that still expected to close this year? Can you talk a little bit about the, I guess, the product type and geographies? And then as a follow-up on the, I guess, the Swiss investment, I guess, what's the thought process there in terms of deciding to allocate new capital for an investment as opposed to sitting on the sidelines?

On the properties that is to in-road investment.

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

Good morning. Thank you. A question for me on just the legacy steward asset ramp up here. Just based on the update that you've given us and the expected 17 million in 3Q, are you still on pace to hit that 160 million annualized run rate by October 26 or do you think you're running ahead at this point?

Well, I think the operators are running ahead. whether any of them will agree to wrap up their rent from their kind of doubted.

Got it. And then, you know, you increased your equity investment in Infracore in the quarter. Could you elaborate on the strategic rationale and the expected return profile?

Yeah, that was primarily done to pay off debt in Infracore. It had debt that was coming due, and we thought it was a good return on our investment.

Very helpful. Thank you.

So your next question comes from the line of Omatayo Okasanjo at Deutsche Bank. Please go ahead.

Yes, good morning, everyone. Steve, I just wanted to come from, I think, a point you made earlier on with prospect. The California asset, you talked about a stalking horse on that. Is that going to be sold? I thought there was an opportunity to possibly re-tenet it instead.

Tayo, you broke up there at the end, but I think you're asking about the, there are people that are looking at the facilities, and I think within the next...

Okay, that's helpful. And then, Ed, I appreciate the comments you made earlier on about the changes to ACA and Medicaid expansion, and kind of what you thought some of your operators would have to do, operators in general would have to do in anticipation of that. Can you just talk to me a little bit about, again, when you talk to your operators, kind of how they're gearing up for that to ultimately happen once some of those changes start to happen in 2028? Like, what are the key things they really have to get right over the next two to three years?

You know, Jayo, if you look at the bill and the intent back into the, if you ask our operators, most of them believe that nobody will know for sure for a number of years to come.

Gotcha. That's helpful. And then last one for Steve, the balance on the line of credit and also the cash balance kind of remains elevated. I know in 1Q, you were kind of trying to manage around, you know, some uncertainty around, you know, write-offs and things like that associated with prospects. Just kind of curious, with that kind of behind you, now that you've kind of taken this, you know, additional write-offs of $113 or $130 or so this quarter, why is that still elevated and if we can expect some payoff of the line with the large hash balance going forward?

Yeah, you're right, Tayo. It's the same explanation as in the first quarter. I'll be significantly lower to the key date here. It's at the end of the next quarter.

So July, you've already paid it down already in July. That's right. Excellent. Thank you very much.

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

Morning. Thank you for taking my question. I was hoping that you could add a little bit more color on the CMS proposed elimination of the inpatient only list. I know you just made some comments about the big, beautiful bill, but I was curious if there's been any conversations on that, if how that would impact the operation on your tenant level.

So, Farrell, your volume was so low we couldn't hear the first part of your question. We heard the last part. It went back up. Can you repeat that?

Sorry about that. First of all, thank you for taking my question, but I was curious if you could add a little color around the CMS proposed elimination of the inpatient only list and how that may impact the operations on the tenant level.

Yeah, I think what you're referring to is that it just goes from an inpatient to an outpatient.

Okay, thank you. And also a little bit more color. I know you mentioned there was about 3% of rent not collected. And I think there was also a note of in the press release on the $500,000 in rent related to two facilities. If you could just give a little bit more color.

Sure. It's the facilities in Ohio.

Okay. Thank you very much.

Your next question comes from the line of Vikram Malhotra with Bizuho. Please go ahead.

Hi, this is Georgi on from Vikram. And my apologies if I missed that. I just joined a little bit later. But have you provided any additional loans to the HSA and does the HSA EBITDA cover the cash rent they're paying right now?

The answer is yes and no. We did loan an additional five million dollars in May. That was again part of the issues where they were having those have been...

Thank you. Just one more for me just on the one tenant that is below one coverage I think that's those are the Columbia assets what's the latest there any update on you know where you do you see coverage trending and you know are you and is there like a potential risk you're monitoring so interestingly those hospitals are performing exceptionally well they are extreme the problem is is they aren't on the system down there it's not just our hospitals it's it's countrywide administration the new

election is in may of 20 issue of whether or not the facility great thank you so much for taking my questions thank you i will now turn the call back over to ed alden for closing remarks john thank you very much and thank all of you ladies and gentlemen that concludes today's

conference call we thank you for your participation you may now disconnect your lines have a pleasant day everyone