Dallas-based Steward Health Care led losses again for Medical Properties Trust, one of the world's largest hospital real estate owners, in the first quarter of 2024, ended March 31, according to MPT's recent financial reports.
The company's net loss saw around $693 million in impairments mostly attributed to non-real estate adjustments related to Steward, including MPT's $360 million loan to Steward, its Steward equity investment, and its International Joint Venture loan.
Steward filed for Chapter 11 bankruptcy May 6. The health system also shared that it was $9 billion in debt and hopes to sell its 31 hospitals.
During a May 9 earnings call, MPT shared that it's plan is to replace Steward with "better qualified operators" at many of its hospitals leased to Steward.
Here are nine findings from the report:
1. Steward paid $9 million in cash rent and $2 million cash interest on multiple working capital and additional loans to MPT in the first quarter of 2024.
2. MPT provided Steward with a $60 million bridge loan in January. MPT and Steward's asset-backed creditors also previously provided Steward with $75 million each in additional loans to help the for-profit health system with "re-tenanting and business divestiture efforts," according to the report.
3. Most recently, the company approved $75 million in debtor-in-possession financing for Steward after it filed for bankruptcy. MPT has not committed to any additional funding and expects Steward to use the funds to maintain patient care while it searches for new hospital operators.
4. "Regarding Steward's recent filing for Chapter 11 bankruptcy, we expect this process may facilitate an orderly transition of Steward’s operations to new operators," Edward Aldag, chairman, president and CEO of Medical Properties Trust, said in the release. "As Steward continues these efforts, MPT has agreed to provide $75 million in DIP funding to ensure continued operations and continuity of patient care.
5. Normalized funds from operations was $142 million in the first quarter ended March 31, a 36% decrease from $222 million during the same time period in 2023. MPT blamed the "significant decrease in revenue related to Steward" for the NFFO decrease.
6. MPT offloaded 75% interest in five Steward-operated Utah hospitals to Englewood, Colo.-based Catholic Health Initiatives Colorado, part of Chicago-based CommonSpirit Health, for around $1.1 billion in April. It also sold five hospitals in California and New Jersey for $350 million to Ontario, Calif.-based Prime Healthcare in April.
7. Los Angeles-based Prospect Medical Holdings paid $7 million in cash rent and interest to MPT in the first quarter of 2024. MPT's estimated fair market value investment in PHP Holdings decreased by around $60 million in the first quarter of 2024 "as the result of changes in independent third party appraisals," the release said.
8. "Looking ahead, we remain confident in the valuable role MPT serves in the healthcare ecosystem – providing operators with necessary financing solutions to optimize their capital stack and redirect resources towards caring for patients. We have constructed a highly diversified portfolio across geographies, operators, and facility types with significant long-term cash flow potential," Mr. Aldag said in the release.
9. MPT's net loss for the first quarter hit $735.4 million, a significant decrease from the $33 million increase reported in the same period in 2023.
Editor's note: this story has been updated as of May 10 at 11:14 a.m. CT.