UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 10, 2019
MEDICAL PROPERTIES TRUST, INC.
MPT OPERATING PARTNERSHIP, L.P.
(Exact Name of Registrant as Specified in Charter)
Maryland Delaware |
001-32559 333-177186 |
20-0191742 20-0242069 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
1000 Urban Center Drive, Suite 501 | ||
Birmingham, AL | 35242 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (205) 969-3755
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Securities Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered | ||
Common Stock, par value $0.001 per share, of Medical Properties Trust, Inc. | MPW | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
This Current Report on Form 8-K is filed by Medical Properties Trust, Inc., a Maryland corporation (the Company), and MPT Operating Partnership, L.P., a Delaware limited partnership through which the Company conducts substantially all of its operations (the Operating Partnership). Through one of its wholly-owned subsidiaries, the Company serves as the sole general partner of the Operating Partnership. Unless otherwise indicated or unless the context requires otherwise, references to we and our refer to the Company, the Operating Partnership and any other subsidiaries thereof.
Item 1.01. Entry into a Material Definitive Agreement.
Acquisition of Prospect Hospital Portfolio
On July 10, 2019, the Operating Partnership entered into definitive agreements pursuant to which certain of its subsidiaries will invest approximately $1.55 billion in a portfolio of 14 acute care hospitals and two behavioral health facilities currently owned and operated by Prospect Medical Holdings, Inc. (Prospect).
Under the terms of the agreements, certain subsidiaries of the Operating Partnership will acquire from Prospect all of its interests in the real estate of 11 acute care hospitals and two behavioral health facilities for an aggregate purchase price of approximately $1.4 billion. Such hospitals and facilities will then be leased back to Prospect under two separate master leases. In addition, (i) a subsidiary of the Operating Partnership will make a mortgage loan in the amount of approximately $51.3 million, secured by a first mortgage on an acute care hospital, and (ii) a subsidiary of the Companys taxable REIT subsidiary will make a term loan of approximately $112.9 million, which will mature upon the earlier of three years or the satisfaction of certain conditions. After the maturity of the term loan and upon satisfaction of certain conditions, other subsidiaries of the Operating Partnership will acquire from Prospect all of its interests in the real estate of two additional acute care hospitals, which real estate will be added to one of the master leases. The master leases, mortgage loan, and term loan will be cross-defaulted and cross-collateralized. The master leases and mortgage loan will have substantially similar terms, with 15-year fixed term subject to three extension options, plus annual increases at the greater of CPI or 2%, with a cap of 4%.
The table below sets forth pertinent details with respect to the hospitals and behavioral health facilities in the Prospect portfolio:
Hospital |
City | State | Form of Investment |
Hospital Type |
Licensed Beds |
|||||||||||||||
Southern CA Hospital at Hollywood |
Los Angeles | California | Fee Simple | Acute | 100 | |||||||||||||||
Southern CA Hospital at Van Nuys |
Van Nuys | California | Fee Simple | Behavioral | 57 | |||||||||||||||
Southern CA Hospital at Culver City |
Culver City | California | Fee Simple | Acute | 420 | |||||||||||||||
Los Angeles Community Hospital at Norwalk |
Norwalk | California | Fee Simple | Acute | 50 | |||||||||||||||
Los Angeles Community Hospital |
Los Angeles | California | Fee Simple | Acute | 129 | |||||||||||||||
Los Angeles Community Hospital at Bellflower |
Bellflower | California | Fee Simple | Behavioral | 144 | |||||||||||||||
Foothill Regional Medical Center |
Tustin | California | Mortgage Loan | Acute | 177 | |||||||||||||||
Manchester Memorial Hospital |
Manchester | Connecticut | Fee Simple | Acute | 249 | |||||||||||||||
Rockville General Hospital |
Vernon | Connecticut | Fee Simple | Acute | 102 | |||||||||||||||
Waterbury Hospital |
Waterbury | Connecticut | Fee Simple | Acute | 357 | |||||||||||||||
Crozer-Chester Medical Center |
Upland | Pennsylvania | Fee Simple | Acute | 300 | |||||||||||||||
Springfield Hospital |
Springfield | Pennsylvania | Fee Simple | Acute | 25 | |||||||||||||||
Taylor Hospital |
Ridley Park | Pennsylvania | Fee Simple | Acute | 105 | |||||||||||||||
Delaware County Memorial Hospital |
Drexel Hill | Pennsylvania | Fee Simple | Acute | 168 | |||||||||||||||
|
|
|||||||||||||||||||
Total Licensed Beds* |
2,383 | |||||||||||||||||||
|
|
* | Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions. |
The agreements provide for the potential for a future purchase price adjustment of up to an additional $250.0 million based on achievement of certain performance thresholds over a three-year period. Any such adjustment will be added to the lease base upon which the Company will earn a return in accordance with the master leases.
Subject to customary closing conditions, the Company expects to consummate the transactions described above in the second half of 2019 with respect to all of the real estate other than the two properties subject to a delayed closing.
The Company intends to finance the transaction with funds from various financing arrangements, which may include borrowings under the bridge loan facility described below and revolving credit facility, proceeds from security issuances, cash on hand or a combination thereof. We cannot assure you that we will be able to successfully complete the Prospect investment on the terms described or at all.
Bridge Loan Facility Commitment Letter
On July 10, 2019, the Company received a commitment to provide a senior unsecured bridge loan facility in an original principal amount of $1.55 billion to fund its investment in the Prospect portfolio, if necessary, pursuant to a commitment letter from Barclays Bank PLC. The Company will pay certain customary fees in connection with the bridge loan facility. The bridge loan facility, if funded, will mature 364 days after the closing date of the Prospect portfolio investment. The funding of the bridge loan facility is contingent on the satisfaction of customary conditions, including, but not limited to, the execution and delivery of definitive documentation and the consummation of the Prospect portfolio. The principal amount of the bridge loan facility may be reduced in connection with certain equity and debt issuances by the Operating Partnership and/or the Company. We cannot assure you that we will be able to successfully borrow under the bridge loan facility on the terms described or at all.
Item 7.01. Regulation FD Disclosure.
On July 15, 2019, the Company issued a press release announcing the Prospect investment described in Item 1.01 of this Current Report on Form 8-K. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
In addition, the Company has prepared an investor presentation in connection with the Prospect investment for use with analysts and investors beginning on July 15, 2019. A copy of this presentation is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The presentation may also be viewed on the Companys website at www.medicalpropertiestrust.com.
The information contained in this Item 7.01 and exhibits thereto is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act) or otherwise. The information in this Item 7.01, including the exhibits thereto and referenced materials posted to the Companys website, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended (the Securities Act) or into any filing or other document pursuant to the Securities Exchange Act of 1934, as amended, except as otherwise expressly stated in any such filing.
Item 8.01. Other Events
Attached as Exhibit 99.3 to this Current Report and incorporated herein by reference are the consolidated balance sheets, statements of operations, statements of comprehensive loss, statements of changes in members deficit, and statements of cash flows of Steward Health Care System LLC (Steward) as of and for the years ended December 31, 2018 and 2017 (unaudited) but excludes the notes at this time. Since the concentration of the Companys leases with Steward was greater than 20% of the Companys total assets at December 31, 2018, Stewards financial statements may be material to investors in our Company. The Company intends to file the full audited financial statements of Steward as of and for the years ended December 31, 2018 and 2017 via Form 10-K/A promptly upon such full set of financial statements (including the notes) becoming available. The financial information attached as Exhibit 99.3 hereto was provided to us by Steward, and the Company did not participate in its preparation or review.
As of the date of this Current Report on Form 8-K, Steward is current on all lease rent and loan interest payments to the Company.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements as that term is defined by Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements can generally be identified by the use of forward-looking words such as may, will, would, could, expect, intend, plan, aim, estimate, target, anticipate, believe, continue, objectives, outlook, guidance or other similar words, and include statements regarding the Companys plans, strategies, objectives, targets, future expansion and development activities and expected financial performance that are not historical facts. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company or future events to differ materially from those expressed in or underlying such forward-looking statements, including without limitation: the satisfaction of all conditions to, and the closing of the Prospect acquisition and related transactions on the terms contemplated or at all; the ability of the Companys tenants to meet the terms of their agreements; expected payout ratio; the amount of acquisitions of healthcare real estate, if any; capital markets conditions; the repayment of debt arrangements; statements concerning the additional income to the Company as a result of ownership interests in certain hospital operations and the timing of such income; the payment of future dividends, if any; completion of additional debt or equity arrangements, and additional investments; national and international economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of the Companys business plan; financing risks; the Companys ability to maintain its status as a real estate investment trust for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular; and the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis, and the factors referenced under the section captioned Item 1.A Risk Factors in the Annual Report on Form 10-K of the Company and the Operating Partnership for the year ended December 31, 2018, and other risks described in documents subsequently filed by the Company or the Operating Partnership from time to time with the Securities and Exchange Commission.
Item 9.01. Financial Statements and Exhibits.
(d) | Exhibits |
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.
MEDICAL PROPERTIES TRUST, INC. | ||
By: | /s/ R. Steven Hamner | |
Name: | R. Steven Hamner | |
Title: | Executive Vice President and Chief Financial Officer |
Date: July 15, 2019
MPT OPERATING PARTNERSHIP, L.P. | ||
By: | /s/ R. Steven Hamner | |
Name: | R. Steven Hamner | |
Title: | Executive Vice President and Chief Financial Officer of the sole member of the general partner of MPT Operating Partnership, L.P. |
Date: July 15, 2019
Exhibit 99.1
Contact: Tim Berryman
Director Investor Relations
Medical Properties Trust, Inc.
(205) 969-3755
tberryman@medicalpropertiestrust.com
MEDICAL PROPERTIES TRUST ANNOUNCES $1.75 BILLION INVESTMENT IN 24 HOSPITAL FACILITIES
Year-to-Date Acquisitions of $3.0 Billion Surpasses 2019 Full Year Acquisition Goal and
Establishes Record Acquisitions Year
Weighted Average GAAP Rate of 8.2% for 2019 YTD Acquisitions
Transactions Immediately Accretive; Increases Run Rate Guidance for Net Income to $1.08 to $1.12 and NFFO to $1.54 to $1.58 Per Share
Birmingham, AL July 15, 2019 Medical Properties Trust, Inc. (MPT or the Company) (NYSE: MPW), today announced that it has entered into definitive agreements with two new operators and completed a transaction with a third new operator involving in the aggregate 24 hospital facilities for a total investment of approximately $1.75 billion. With these transactions, MPT has surpassed its 2019 acquisition guidance of $2.5 billion, with a total investment of $3.0 billion at a blended GAAP rate of 8.2%, within its previously estimated range of 7.5% to 8.5%.
The agreements include investments in:
● | 14 acute care hospitals and 2 behavioral health hospital facilities operated by Prospect Medical Holdings, Inc. (Prospect) for $1.55 billion; |
● | 7 community hospitals operated by Saint Lukes Health System (Saint Lukes) for $145 million; and |
● | 1 acute care hospital operated by Halsen Healthcare, LLC (Halsen) for $55 million. |
The Company has posted a presentation with additional information regarding these transactions on its website at www.medicalpropertiestrust.com.
We are very pleased with the acquisition of these outstanding hospitals which continues our sector leading record of accretive growth, increases the size and diversity of our portfolio, and further reinforces our reputation as the global leader in hospital real estate, said Edward K. Aldag, Jr., MPTs Chairman, President and CEO. This is a marquee year for Medical Properties Trust as we entered 2019 in a prime position for accretive capital deployment and subsequently increased our acquisitions guidance by $1.0 billion due to our rapid execution on our deep and diverse global pipeline. We have not only achieved - but surpassed - our full year acquisition goal of $2.5 billion at just the half-way mark of the year. Importantly, with the addition of these properties to our portfolio, we have initiated three new operator relationships, extended into new geographic markets, and expanded service lines, including not-for-profit and behavioral.
1
Mr. Aldag continued, Looking ahead, we remain confident that our preeminent global hospital real estate platform, the unique and balanced portfolio that we have deliberately and strategically built, and the robustness of our pipeline will enable us to create consistently strong cash returns for our shareholders while continuing to deliver accretive growth. Specifically, our growth trajectory reflects the mounting interest among premier healthcare institutions in the long-term capital that our financing model provides and Medical Properties Trusts strong position as the global leader in hospital real estate finance. We are pleased with our achievements for the year thus far, and look forward to continuing our progress and enhancing shareholder value in the second half of 2019 and beyond.
Benefits of Transactions
● | Achieves Immediate Accretion: Immediately accretive to Normalized Funds from Operations (NFFO) per share; increases run rate guidance for net income to $1.08 to $1.12 and NFFO to $1.54 to $1.58 per diluted share. |
● | Improves Portfolio Diversification: Reduces exposure to MPTs largest tenant, Steward Healthcare, to 30.3%, a 23% reduction from 39.5% as of December 31, 2018, and its two largest tenants combined to 42.6%, down from 51.1%. Expands MPTs geographical presence to 30 U.S. states and increases acute care hospitals to 79.0% as a percentage of MPTs total portfolio, up from 70.5% as of December 31, 2018, and 86.8% as a percentage of MPTs U.S. portfolio, up from 84.2%. |
● | Establishes New Operator Relationships: Adds three new tenants to MPTs portfolio of industry leading operators, each with unique characteristics that strengthen our overall portfolio and exhibit significant growth potential. |
o | Prospect Medical Holdings: MPTs investment in the real estate interests of 14 acute care hospitals and 2 behavioral health facilities operated by Prospect in the Medicaid expansion states of California, Pennsylvania, and Connecticut creates a new avenue of growth for the Company. Prospects mission-critical hospitals are infrastructure assets located in large, densely-populated urban communities having rapidly growing populations and significant need of hospital care. An experienced management team at Prospect, led by CEO and Chairman, Samuel Lee, has a unique understanding of how to run their hospitals profitably in a lower, state-based reimbursement environment by providing high quality care and efficiently managing costs. Prospects hospitals are necessary to the communities they serve and relieve pressure on other health systems that are unable to effectively serve all patients. |
o | Saint Lukes Health System: With the completion of Companys investment in June in seven high quality, new construction community hospitals within Saint Lukes Health System, MPT continues to penetrate the not-for-profit sector with leading operators. Saint Lukes is an investment grade-rated (Moodys: A1/S&P: A+), not-for-profit healthcare operator, based in Missouri that employs over 8,600 people across the Kansas City market area. Each facility that MPT acquired currently serves as an access point for Saint Lukes in high traffic retail areas. The majority of the facilities are located in Johnson County, which is the fastest growing county in the Kansas City metropolitan area. |
o | Halsen Healthcare: The Companys investment in Watsonville Community Hospital, a 106-bed acute care hospital profitably serving the healthcare needs of Watsonville, California and its surrounding market area south of San Jose, initiates a new operator relationship for MPT. Halsen, a newly-established operator boasts a deeply experienced executive team, comprised of former Tenet, Community and HCA executives, whom the Company expects to grow with in the coming years. |
2
● | Achieves Greater Scale: Increases the number of properties in MPTs portfolio to 326 and the number of licensed beds to over 37,500; raises the Companys total gross assets to approximately $12.6 billion on a pro forma basis, up 30% from $9.7 billion as of December 31, 2018. |
Mr. Aldag concluded by discussing the current cap rate environment and investment spreads. There has been some compression of cap rates in the global hospital real estate market due to the increased competition from sophisticated institutional investors such as sovereign wealth who are attracted to MPTs model of securing long-term, predictable, inflation protected cash flows from hospitals. However, we are still able to grow our earnings as spreads have remained relatively constant and in some recent transactions, have been higher than historic due to our low cost of capital, as a result of lower inflation and interest rates. In this globally low inflationary environment, MPT continues to achieve internal growth for its shareholders through built in lease protections, such as our minimum annual escalators.
The Prospect and Halsen transactions are expected to close in the second half of 2019, subject to customary closing conditions. Barclays acted as exclusive financial advisor to MPT and provided committed financing for a new $1.55 billion senior unsecured bridge loan in connection with the Prospect transaction. The Company intends to refinance the acquisitions as market conditions warrant with a combination of new unsecured debt and equity.
Included in the $1.55 billion initial investment amount for Prospect is a $113 million three-year term loan which, upon satisfaction of certain conditions, will be canceled in return for MPTs acquisition of the real estate of two of the acute care hospitals noted previously. In addition, the Prospect agreement provides for a future purchase price adjustment of up to $250 million based on achievement of certain performance thresholds over a three-year period. Any such additional investment will be added to the lease base, and MPT will earn additional rent based on the then effective lease rates in accordance with the master leases.
About Medical Properties Trust, Inc.
Medical Properties Trust, Inc. is a self-advised real estate investment trust formed to acquire and develop net-leased hospital facilities. The Companys financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. For more information, please visit the Companys website at www.medicalpropertiestrust.com.
The statements in this press release that are forward looking are based on current expectations and actual results or future events may differ materially. Words such as expects, believes, anticipates, intends, will, should and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company or future events to differ materially from those expressed in or underlying such forward-looking statements, including without limitation: the satisfaction of all conditions to, and the timely closing (if at all) of pending transactions, including Prospect and Halsen investments; annual run-rate net income and NFFO per share; the amount of acquisitions of healthcare real estate, if any; results from potential sales and joint venture arrangements, if any; capital markets conditions; estimated leverage metrics; the repayment of debt arrangements; statements concerning the additional income to the Company as a result of ownership interests in equity investments and the timing of such income; the payment of future dividends, if any; completion of additional debt arrangements, and additional investments; national and international economic, business, real estate and other market conditions; the competitive environment in which the Company operates; the execution of the Companys business plan; financing risks; the Companys ability to maintain its status as a REIT for income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular. For further discussion of the factors that could affect
3
outcomes, please refer to the Risk factors section of the Companys Annual Report on Form 10-K for the year ended December 31, 2018 and as updated by the Companys subsequently filed Quarterly Reports on Form 10-Q and other SEC filings. Except as otherwise required by the federal securities laws, the Company undertakes no obligation to update the information in this press release.
# # #
4
MEDICAL PROPERTIES TRUST, INC. AND SUBSIDIARIES
Annual Run-Rate Guidance Reconciliation
(Unaudited)
Annual Run-Rate Guidance - Per Share(1) | ||||||||
Low | High | |||||||
Net income attributable to MPT common stockholders |
$ | 1.08 | $ | 1.12 | ||||
Participating securities share in earnings |
- | - | ||||||
|
|
|
|
|||||
Net income, less participating securities share in earnings |
$ | 1.08 | $ | 1.12 | ||||
Depreciation and amortization |
0.45 | 0.45 | ||||||
|
|
|
|
|||||
Funds from operations |
$ | 1.53 | $ | 1.57 | ||||
Other adjustments |
0.01 | 0.01 | ||||||
|
|
|
|
|||||
Normalized funds from operations |
$ | 1.54 | $ | 1.58 | ||||
|
|
|
|
(1) The guidance is based on current expectations and actual results or future events may differ materially from those expressed in this table, which is a forward-looking statement within the meaning of the federal securities laws. Please refer to the forward-looking statement included in this press release and our filings with the Securities and Exchange Commission for a discussion of risk factors that affect our performance.
Pro Forma Total Gross Assets
(Unaudited)
Pro Forma | ||||
March 31, 2019 | ||||
Total Assets |
$ | 9,231,453 | ||
Add: |
||||
Completed investments since March 31, 2019 and |
3,108,777 | |||
Accumulated depreciation and amortization |
498,915 | |||
Incremental gross assets of our joint ventures(2) |
540,542 | |||
Less: |
||||
Cash and cash equivalents |
(745,548) | |||
|
|
|||
Pro Forma Total Gross Assets(3) |
$ | 12,634,139 | ||
|
|
(2) Adjustment needed to reflect our share of our joint ventures gross assets.
(3) Pro forma total gross assets is total assets before accumulated depreciation/amortization, includes investments completed since March 31, 2019 and assumes real estate binding commitments on new investments and unfunded amounts on development deals and commenced capital improvement projects are funded, and assumes cash on hand is used in these transactions. We believe pro forma total gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our binding commitments close and our other commitments are fully funded.
Exhibit 99.2 Medical Properties Trust Acquires 24 Hospitals for $1.75 Billion July 2019Exhibit 99.2 Medical Properties Trust Acquires 24 Hospitals for $1.75 Billion July 2019
Safe Harbor & Disclaimer This presentation contains certain “forward-looking” statements as that term is defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “aim”, “estimate”, “target”, “anticipate”, “believe”, “continue”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our plans, strategies, objectives, targets, future expansion and development activities and expected financial performance that are not historical facts. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future events to differ materially from those expressed in or underlying such forward‐looking statements, including without limitation: the satisfaction of all conditions to, and the closing of the Prospect acquisition and the other transactions described herein on the terms contemplated or at all; our tenants ability to meet the terms of their agreements; expected payout ratio; the amount of acquisitions of healthcare real estate, if any; capital markets conditions; the repayment of debt arrangements; statements concerning the additional income to us as a result of ownership interests in certain hospital operations and the timing of such income; the payment of future dividends, if any; completion of additional debt or equity arrangements, and additional investments; national and international economic, business, real estate and other market conditions; the competitive environment in which we operate; the execution of our business plan; financing risks; our ability to maintain our status as a real estate investment trust for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular; and the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis, and the factors referenced under the section captioned “Item 1.A Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, and other risks described in documents subsequently filed by us or MPT Operating Partnership, L.P., our operating partnership, from time to time with the Securities and Exchange Commission. The pro forma information included in this presentation adjusts our historical information to give effect to the pro forma events that are directly attributable to the Prospect acquisition and other transactions referred herein and is factually supportable. The pro forma adjustments are preliminary and are not necessarily indicative of results that may have actually occurred had the Prospect acquisition and other transactions referred herein taken place on the dates noted. The pro forma adjustments are based upon available information and assumptions that we believe reasonable. This presentation is for informational purposes only and shall not constitute an offer to sell or a solicitation of an offer to buy any securities the company. 1Safe Harbor & Disclaimer This presentation contains certain “forward-looking” statements as that term is defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “would”, “could”, “expect”, “intend”, “plan”, “aim”, “estimate”, “target”, “anticipate”, “believe”, “continue”, “objectives”, “outlook”, “guidance” or other similar words, and include statements regarding our plans, strategies, objectives, targets, future expansion and development activities and expected financial performance that are not historical facts. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or future events to differ materially from those expressed in or underlying such forward‐looking statements, including without limitation: the satisfaction of all conditions to, and the closing of the Prospect acquisition and the other transactions described herein on the terms contemplated or at all; our tenants ability to meet the terms of their agreements; expected payout ratio; the amount of acquisitions of healthcare real estate, if any; capital markets conditions; the repayment of debt arrangements; statements concerning the additional income to us as a result of ownership interests in certain hospital operations and the timing of such income; the payment of future dividends, if any; completion of additional debt or equity arrangements, and additional investments; national and international economic, business, real estate and other market conditions; the competitive environment in which we operate; the execution of our business plan; financing risks; our ability to maintain our status as a real estate investment trust for federal income tax purposes; acquisition and development risks; potential environmental and other liabilities; and other factors affecting the real estate industry generally or healthcare real estate in particular; and the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain equity or debt financing secured by our properties or on an unsecured basis, and the factors referenced under the section captioned “Item 1.A Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, and other risks described in documents subsequently filed by us or MPT Operating Partnership, L.P., our operating partnership, from time to time with the Securities and Exchange Commission. The pro forma information included in this presentation adjusts our historical information to give effect to the pro forma events that are directly attributable to the Prospect acquisition and other transactions referred herein and is factually supportable. The pro forma adjustments are preliminary and are not necessarily indicative of results that may have actually occurred had the Prospect acquisition and other transactions referred herein taken place on the dates noted. The pro forma adjustments are based upon available information and assumptions that we believe reasonable. This presentation is for informational purposes only and shall not constitute an offer to sell or a solicitation of an offer to buy any securities the company. 1
A Marquee Year for Medical Properties Trust With the acquisitions described in today’s announcement, MPT has committed $3.0 billion in hospital investments across the globe in 2019 YTD, surpassing its full-year acquisition guidance during the first half of the year $45mm Acquisition of BMI 2019 YTD Highlights Harbour Hospital Total Investments: $282.5mm Investment in $3.0 billion Switzerland Real Estate and (2) Operations Run-Rate Net Income Range: $1.08 – $1.12 / share $1.55bn Acquisition of 16 Prospect Hospitals Run-Rate NFFO Range: $145mm Acquisition of 7 Saint $1.54 – $1.58 / share Luke’s Community Hospitals (1) $55mm Investment in $906mm Acquisition of 11 Watsonville Community Hospital Blended GAAP Yield: (3) Healthscope Hospitals 8.2% Properties Operators Largest Operator Concentration Countries 12/31/2018 275 30 40% 5 Pro Forma Today 326 36 30% 7 Note Prospect and Halsen acquisitions are pending. No assurances can be made that announced and pending transactions will close on the terms indicated or at all. 1. Includes working capital loan. 2 2. Gross investment in Switzerland real estate and operator is ~$456mm. 3. Includes stamp duties and registration fees.A Marquee Year for Medical Properties Trust With the acquisitions described in today’s announcement, MPT has committed $3.0 billion in hospital investments across the globe in 2019 YTD, surpassing its full-year acquisition guidance during the first half of the year $45mm Acquisition of BMI 2019 YTD Highlights Harbour Hospital Total Investments: $282.5mm Investment in $3.0 billion Switzerland Real Estate and (2) Operations Run-Rate Net Income Range: $1.08 – $1.12 / share $1.55bn Acquisition of 16 Prospect Hospitals Run-Rate NFFO Range: $145mm Acquisition of 7 Saint $1.54 – $1.58 / share Luke’s Community Hospitals (1) $55mm Investment in $906mm Acquisition of 11 Watsonville Community Hospital Blended GAAP Yield: (3) Healthscope Hospitals 8.2% Properties Operators Largest Operator Concentration Countries 12/31/2018 275 30 40% 5 Pro Forma Today 326 36 30% 7 Note Prospect and Halsen acquisitions are pending. No assurances can be made that announced and pending transactions will close on the terms indicated or at all. 1. Includes working capital loan. 2 2. Gross investment in Switzerland real estate and operator is ~$456mm. 3. Includes stamp duties and registration fees.
A Proven Growth Strategy Acute care real estate opportunity is rapidly expanding Growing Acceptance Large Domestic & Further Accretive Consolidation of of Sale-Leaseback International Opportunities in Hospital Systems Model Among Opportunity Set 2H 2019 and Beyond Not-For-Profit Operators • Substantial domestic and • Consolidation of hospital • ~75% of all community • ~$6 billion invested since international potential systems continues, searching hospitals in the U.S. are 2016 while supporting growth acquisition targets for cost efficiencies and owned by not-for-profit of best-in-class operators economies of scale (“NFP”) operators • ~5,000 community • MPT’s platform is positioned hospitals in the U.S. and • Increasing ownership of • Leading NFP operators to continue growing in the ~20,000+ globally hospitals by for-profit systems continue building relationships acute care space in the established in the past with private real estate second half of 2019 and • Estimated $0.5 trillion of U.S. decade (i.e. Steward, owners and REITs to leverage beyond hospital real estate Prospect) and increasing their scale and cost of capital • Additional $0.5 – $1.0 trillion investment from global private international hospital real equity (i.e. Apollo, Cerberus, estate Brookfield) 3 Sources: Company filings, American Hospital Association, World Health Organization and Wall Street research.A Proven Growth Strategy Acute care real estate opportunity is rapidly expanding Growing Acceptance Large Domestic & Further Accretive Consolidation of of Sale-Leaseback International Opportunities in Hospital Systems Model Among Opportunity Set 2H 2019 and Beyond Not-For-Profit Operators • Substantial domestic and • Consolidation of hospital • ~75% of all community • ~$6 billion invested since international potential systems continues, searching hospitals in the U.S. are 2016 while supporting growth acquisition targets for cost efficiencies and owned by not-for-profit of best-in-class operators economies of scale (“NFP”) operators • ~5,000 community • MPT’s platform is positioned hospitals in the U.S. and • Increasing ownership of • Leading NFP operators to continue growing in the ~20,000+ globally hospitals by for-profit systems continue building relationships acute care space in the established in the past with private real estate second half of 2019 and • Estimated $0.5 trillion of U.S. decade (i.e. Steward, owners and REITs to leverage beyond hospital real estate Prospect) and increasing their scale and cost of capital • Additional $0.5 – $1.0 trillion investment from global private international hospital real equity (i.e. Apollo, Cerberus, estate Brookfield) 3 Sources: Company filings, American Hospital Association, World Health Organization and Wall Street research.
Preeminent Global Hospital Real Estate Platform Global leader in hospital real estate finance focused on investments in licensed hospitals, unlocking value around the globe to deliver continued shareholder growth Best-in-class acute care portfolio driven Established source of capital for leading by strong operator relationships hospital operators around the globe • Over 325 properties in 7 countries and 30 • Over $12 billion gross investments states worldwide • 36 total operators, including leading not- • $3.0bn new investments announced or for-profit and for-profit systems in the U.S. completed 2019 YTD at a blended and abroad GAAP yield of approximately 8.2% Unlocking new global growth Strong track record of delivering opportunities superior returns to shareholders • New and compelling international markets • 5-year total return of 101% vs. 43% for (Australia, Switzerland) enhance existing (1) healthcare REIT sector global platform (2) • 5.4% dividend yield • Completed over $3.2 billion of international investments since 2013 • Historically accretive investment activity • Leased to best-in-class international hospital operators Sources: Company filings and SNL Financial. Note: No assurances can be made that announced and pending transactions will close on the terms indicated or at all. Figures pro forma for newly announced acquisitions. 4 1. As of 7/12/2019. Healthcare REIT sector per SNL Financial. 2. Based on closing price of $18.51 as of 7/12/2019 and regular dividend paid on 7/11/2019.Preeminent Global Hospital Real Estate Platform Global leader in hospital real estate finance focused on investments in licensed hospitals, unlocking value around the globe to deliver continued shareholder growth Best-in-class acute care portfolio driven Established source of capital for leading by strong operator relationships hospital operators around the globe • Over 325 properties in 7 countries and 30 • Over $12 billion gross investments states worldwide • 36 total operators, including leading not- • $3.0bn new investments announced or for-profit and for-profit systems in the U.S. completed 2019 YTD at a blended and abroad GAAP yield of approximately 8.2% Unlocking new global growth Strong track record of delivering opportunities superior returns to shareholders • New and compelling international markets • 5-year total return of 101% vs. 43% for (Australia, Switzerland) enhance existing (1) healthcare REIT sector global platform (2) • 5.4% dividend yield • Completed over $3.2 billion of international investments since 2013 • Historically accretive investment activity • Leased to best-in-class international hospital operators Sources: Company filings and SNL Financial. Note: No assurances can be made that announced and pending transactions will close on the terms indicated or at all. Figures pro forma for newly announced acquisitions. 4 1. As of 7/12/2019. Healthcare REIT sector per SNL Financial. 2. Based on closing price of $18.51 as of 7/12/2019 and regular dividend paid on 7/11/2019.
$3.0bn Cumulative Investments 2019 YTD On July 15, 2019, Medical Properties Trust announced new acquisitions comprising 2019 transactions include: 24 hospitals for a total investment of $1.75 billion with three new operators • $1.55 billion unsecured bridge loan to support Prospect acquisition Hospitals 53 New Operators 6 Pending Investments $1.6bn Completed Investments $1.4bn Prospect Saint Luke’s Halsen Medical Holdings Health System * Healthcare, LLC 2019 YTD Investments $3.0bn 14 7 1 ($ in millions) Acute care hospitals Community hospitals Acute care hospital $1,550 Previously Announced / Closed 2 1 1 Newly-Announced Acquisitions Behavioral health facilities Market (Kansas City) State (California) $906 3 A1 / A+ Highly Experienced (4) (5) Management Team States (CA, CT, PA) Investment Grade Rating $237 _____________ _____________ _____________ $145 $124 $55 $55M $1.55B $145M Halsen Other Saint Luke's Infracore Healthscope Prospect (1) (2) (3) * Acquisition Completed 1. Includes Steward Big Spring, BMI Harbour, Aevis equity investment and one other acquisition. 2. Gross investment value of $410mm. 3. Includes stamp duties and registration fees. 5 4. Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions. 5. Per Moody’s and S&P, respectively.$3.0bn Cumulative Investments 2019 YTD On July 15, 2019, Medical Properties Trust announced new acquisitions comprising 2019 transactions include: 24 hospitals for a total investment of $1.75 billion with three new operators • $1.55 billion unsecured bridge loan to support Prospect acquisition Hospitals 53 New Operators 6 Pending Investments $1.6bn Completed Investments $1.4bn Prospect Saint Luke’s Halsen Medical Holdings Health System * Healthcare, LLC 2019 YTD Investments $3.0bn 14 7 1 ($ in millions) Acute care hospitals Community hospitals Acute care hospital $1,550 Previously Announced / Closed 2 1 1 Newly-Announced Acquisitions Behavioral health facilities Market (Kansas City) State (California) $906 3 A1 / A+ Highly Experienced (4) (5) Management Team States (CA, CT, PA) Investment Grade Rating $237 _____________ _____________ _____________ $145 $124 $55 $55M $1.55B $145M Halsen Other Saint Luke's Infracore Healthscope Prospect (1) (2) (3) * Acquisition Completed 1. Includes Steward Big Spring, BMI Harbour, Aevis equity investment and one other acquisition. 2. Gross investment value of $410mm. 3. Includes stamp duties and registration fees. 5 4. Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions. 5. Per Moody’s and S&P, respectively.
Strengthening Portfolio Quality Through Diversification Operator Asset Type Reduces Steward concentration to 30.3%, from 39.5% Increases general acute care to 79.0%, from 70.5% of total portfolio as of December 31, 2018 as of December 31, 2018 2.2% 6.2% General Acute 6.2% Steward Care 2.9% 10.5% 30.3% 10.5% 26.9% Prospect 12.6% Inpatient Rehab 39.5% Prime Healthcare Pro Pro 16.1% YE YE 27.3% MEDIAN Long-Term 2018 2018 Forma Forma Acute Care Healthscope 70.5% 79.0% 7.2% 12.3% 11.1% 11.6% Other Operators Other Assets 8.2% 8.9% Other Assets Global Domestic (U.S. Only) 2.1% 2.1% 3.6% 4.1% United States Massachusetts 5.5% 2.3% 11.3% 7.2% 5.0% Texas Germany 15.2% 12.0% California 9.0% 9.4% Australia Pro Pro YE YE 29.2% Utah 32.1% 11.6% 2018 2018 Forma Forma Switzerland Pennsylvania 9.3% 80.2% 76.0% 10.9% UK, Spain & Italy Other States 5.4% 8.4% 4.3% Other Assets Other Assets MPT’s largest property represents less than 3.0% of the total portfolio Note: “YE 2018” figures do not include Healthscope acquisition (completed in June 2019). “Pro Forma” adjusted for material events subsequent to quarter end including: (i) closing and funding of Saint Luke’s acquisition for $145 million, (ii) closing and funding of Infracore / Aevis investments for $288 million, (iii) closing and funding of Healthscope acquisition for $906 million including capitalized costs, (iv) closing and funding of Steward Big Spring, BMI Harbour and one other acquisition for 6 $78 million, (v) closing and funding of Prospect portfolio acquisition for $1.55 billion, (vi) closing and funding of Halsen acquisition for $55 million including a working capital loan and (vii) sale of two ancillary properties for net proceeds of $3.5 million and funding of approximately $144.7 million for development projects, capital improvement projects and working capital purposes. Strengthening Portfolio Quality Through Diversification Operator Asset Type Reduces Steward concentration to 30.3%, from 39.5% Increases general acute care to 79.0%, from 70.5% of total portfolio as of December 31, 2018 as of December 31, 2018 2.2% 6.2% General Acute 6.2% Steward Care 2.9% 10.5% 30.3% 10.5% 26.9% Prospect 12.6% Inpatient Rehab 39.5% Prime Healthcare Pro Pro 16.1% YE YE 27.3% MEDIAN Long-Term 2018 2018 Forma Forma Acute Care Healthscope 70.5% 79.0% 7.2% 12.3% 11.1% 11.6% Other Operators Other Assets 8.2% 8.9% Other Assets Global Domestic (U.S. Only) 2.1% 2.1% 3.6% 4.1% United States Massachusetts 5.5% 2.3% 11.3% 7.2% 5.0% Texas Germany 15.2% 12.0% California 9.0% 9.4% Australia Pro Pro YE YE 29.2% Utah 32.1% 11.6% 2018 2018 Forma Forma Switzerland Pennsylvania 9.3% 80.2% 76.0% 10.9% UK, Spain & Italy Other States 5.4% 8.4% 4.3% Other Assets Other Assets MPT’s largest property represents less than 3.0% of the total portfolio Note: “YE 2018” figures do not include Healthscope acquisition (completed in June 2019). “Pro Forma” adjusted for material events subsequent to quarter end including: (i) closing and funding of Saint Luke’s acquisition for $145 million, (ii) closing and funding of Infracore / Aevis investments for $288 million, (iii) closing and funding of Healthscope acquisition for $906 million including capitalized costs, (iv) closing and funding of Steward Big Spring, BMI Harbour and one other acquisition for 6 $78 million, (v) closing and funding of Prospect portfolio acquisition for $1.55 billion, (vi) closing and funding of Halsen acquisition for $55 million including a working capital loan and (vii) sale of two ancillary properties for net proceeds of $3.5 million and funding of approximately $144.7 million for development projects, capital improvement projects and working capital purposes.
2019 YTD Acquisitions Benefits Achieves Immediate Establishes New Increases Portfolio Achieves Benefits of Earnings Accretion Operator Relationships Diversification Greater Scale • Transactions expected to be • Adds six new tenants to MPT’s • Reduces exposure to MPT’s • YTD acquisitions of $3.0 billion largest tenant, Steward Health surpass FY 2019 acquisition goal immediately accretive portfolio of industry leading operators, including new Care System, to 30% from 40% as relationship with A-rated not-for- of December 31, 2018, and its two • Adds 50 hospital facilities to MPT’s • Net Income run-rate estimated to profit health system largest tenants combined to 43% portfolio increasing the number of be $1.08 to $1.12 per share; from 51% properties to 326 and the number increases run-rate NFFO guidance • Unique characteristics of each of licensed beds to over 37,500 to a range of $1.54 to $1.58 per operator strengthen the overall • Expands MPT’s geographical share portfolio and exhibit material future presence to 30 U.S. states • Raises MPT’s total gross assets growth potential 30% from $9.7 billion as of • 2019 YTD blended GAAP yield on • Increases acute care hospitals to December 31, 2018 to announced and completed 79% as a percentage of MPT’s approximately $12.6 billion on a transactions of approximately total portfolio, up from 71% as of pro forma basis 8.2% (in line with previously December 31, 2018, and 87% as a estimated 7.5% - 8.5% range) percentage of MPT’s U.S. portfolio, up from 84% 72019 YTD Acquisitions Benefits Achieves Immediate Establishes New Increases Portfolio Achieves Benefits of Earnings Accretion Operator Relationships Diversification Greater Scale • Transactions expected to be • Adds six new tenants to MPT’s • Reduces exposure to MPT’s • YTD acquisitions of $3.0 billion largest tenant, Steward Health surpass FY 2019 acquisition goal immediately accretive portfolio of industry leading operators, including new Care System, to 30% from 40% as relationship with A-rated not-for- of December 31, 2018, and its two • Adds 50 hospital facilities to MPT’s • Net Income run-rate estimated to profit health system largest tenants combined to 43% portfolio increasing the number of be $1.08 to $1.12 per share; from 51% properties to 326 and the number increases run-rate NFFO guidance • Unique characteristics of each of licensed beds to over 37,500 to a range of $1.54 to $1.58 per operator strengthen the overall • Expands MPT’s geographical share portfolio and exhibit material future presence to 30 U.S. states • Raises MPT’s total gross assets growth potential 30% from $9.7 billion as of • 2019 YTD blended GAAP yield on • Increases acute care hospitals to December 31, 2018 to announced and completed 79% as a percentage of MPT’s approximately $12.6 billion on a transactions of approximately total portfolio, up from 71% as of pro forma basis 8.2% (in line with previously December 31, 2018, and 87% as a estimated 7.5% - 8.5% range) percentage of MPT’s U.S. portfolio, up from 84% 7
$1.75bn Acquisitions Overview$1.75bn Acquisitions Overview
Prospect Medical Holdings Investment Properties: Investment: 14 Acute care hospitals $1.55 billion 2 Behavioral health facilities Term: Locations: 15-year initial term with three renewal options California, Connecticut and (1) Pennsylvania Operated by: Annual Escalator: Prospect Medical Holdings, Inc. Greater of CPI or 2% with a ceiling of 4% • Prospect is a fully-integrated healthcare management company led by an experienced management team • Provides services to patients through various business segments, including hospital services & facilities, medical groups and coordinated regional care • Serves densely populated markets in Medicaid expansion states through large, organized physician groups • Market is oriented toward high managed care penetration • Mission-critical hospitals providing integral healthcare infrastructure to the communities they serve 8 1. Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions.Prospect Medical Holdings Investment Properties: Investment: 14 Acute care hospitals $1.55 billion 2 Behavioral health facilities Term: Locations: 15-year initial term with three renewal options California, Connecticut and (1) Pennsylvania Operated by: Annual Escalator: Prospect Medical Holdings, Inc. Greater of CPI or 2% with a ceiling of 4% • Prospect is a fully-integrated healthcare management company led by an experienced management team • Provides services to patients through various business segments, including hospital services & facilities, medical groups and coordinated regional care • Serves densely populated markets in Medicaid expansion states through large, organized physician groups • Market is oriented toward high managed care penetration • Mission-critical hospitals providing integral healthcare infrastructure to the communities they serve 8 1. Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions.
Prospect Medical Holdings Prospect is a proven operator of community-based hospitals in urban markets and a fundamental player in the acute care national hospital system Targeting Urban Communities Award Winning Management Team Integrated Behavioral Health Services ¡ Mission-critical hospitals in irreplaceable locations for ¡ Prospect is led by CEO and Chairman Samuel Lee, ¡ Behavioral services are typically delivered through state-level reimbursed patients in densely populated, who has over 25 years of industry experience carve-out arrangements separate from traditional urban markets healthcare ¡ Deep and experienced leadership team with 10+ ¡ Low cost of operations, with service profitably years of average tenure at Prospect¡ Prospect integrates behavioral service within many of supported by market demographics its facilities, offering a full spectrum of care to its ¡ Prospect has been recognized by the American Heart patients ¡ Other hospital networks in Prospect’s markets either Association, BlueCross BlueShield of Texas and U.S. not equipped or not properly staffed to deliver and News and World Report, among others, as a leader in ¡ Mental health (prevalent with the Medicaid population) manage costs effectively clinical quality and care impacts >20% of the U.S. population, totaling >$300 billion of direct treatment expense annually Integral Hospital Assets Experience with State-Level Large, Densely Populated Markets ¡ Necessary to the communities they serve, relieving ¡ Patient migration to cities; increase in behavioral Reimbursement Programs pressure from larger hospitals patients / government pay mix ¡ Deep understanding of state reimbursement system ¡ Provide support in certain services (i.e. emergency ¡ Medicaid expansion states and hospital operational network departments and behavioral health) to communities ¡ Essential infrastructure for healthcare delivery in ¡ Strategic physician / payor alignment creates largely unaddressed by regional hospital networks growing markets successful business model ¡ Expert medical management of high utilizer patient population (1) 16 Hospitals 2,383 ~750 ~500,000 ~160 Outpatient Across 3 states Licensed Beds Employed Physicians Members Managed Facilities 9 1. Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions.Prospect Medical Holdings Prospect is a proven operator of community-based hospitals in urban markets and a fundamental player in the acute care national hospital system Targeting Urban Communities Award Winning Management Team Integrated Behavioral Health Services ¡ Mission-critical hospitals in irreplaceable locations for ¡ Prospect is led by CEO and Chairman Samuel Lee, ¡ Behavioral services are typically delivered through state-level reimbursed patients in densely populated, who has over 25 years of industry experience carve-out arrangements separate from traditional urban markets healthcare ¡ Deep and experienced leadership team with 10+ ¡ Low cost of operations, with service profitably years of average tenure at Prospect¡ Prospect integrates behavioral service within many of supported by market demographics its facilities, offering a full spectrum of care to its ¡ Prospect has been recognized by the American Heart patients ¡ Other hospital networks in Prospect’s markets either Association, BlueCross BlueShield of Texas and U.S. not equipped or not properly staffed to deliver and News and World Report, among others, as a leader in ¡ Mental health (prevalent with the Medicaid population) manage costs effectively clinical quality and care impacts >20% of the U.S. population, totaling >$300 billion of direct treatment expense annually Integral Hospital Assets Experience with State-Level Large, Densely Populated Markets ¡ Necessary to the communities they serve, relieving ¡ Patient migration to cities; increase in behavioral Reimbursement Programs pressure from larger hospitals patients / government pay mix ¡ Deep understanding of state reimbursement system ¡ Provide support in certain services (i.e. emergency ¡ Medicaid expansion states and hospital operational network departments and behavioral health) to communities ¡ Essential infrastructure for healthcare delivery in ¡ Strategic physician / payor alignment creates largely unaddressed by regional hospital networks growing markets successful business model ¡ Expert medical management of high utilizer patient population (1) 16 Hospitals 2,383 ~750 ~500,000 ~160 Outpatient Across 3 states Licensed Beds Employed Physicians Members Managed Facilities 9 1. Excludes two properties subject to a delayed closing depending upon satisfaction of certain conditions.
Select Prospect Hospitals Southern California Hospital at Culver City | Culver City, CA Rockville General Hospital | Vernon, CT Manchester Memorial Hospital | Manchester, CT Cozer-Chester Medical Center | Upland, PA 10Select Prospect Hospitals Southern California Hospital at Culver City | Culver City, CA Rockville General Hospital | Vernon, CT Manchester Memorial Hospital | Manchester, CT Cozer-Chester Medical Center | Upland, PA 10
Saint Luke’s Community Hospitals Investment Properties: Investment: 7 community hospitals $145.4 million Location: Term: Kansas City metropolitan area 14-year initial term with two 5-year renewal options Operated and Guaranteed by: Annual Escalator: Saint Luke’s Health System Average 2% fixed escalators (1) MPT Assets (A1 / A+ rated) Other Assets • Saint Luke’s Health System is a not-for-profit healthcare operator based in Kansas City, Missouri • Currently operates 18 hospitals (including a 382-bed flagship hospital), 13 convenient care clinics and three surgery centers across the greater Kansas City region • High quality, new construction community hospitals built within the last two years • Located in high-income demographic areas on major roads / intersections within Johnson County, Kansas - the fastest growing county in the Kansas City region • New relationship between MPT and A-rated not-for-profit (with comprehensive diagnostic and treatment facilities) signifies rapidly evolving and expanding hospital market 11 1. Per Moody’s and S&P, respectively.Saint Luke’s Community Hospitals Investment Properties: Investment: 7 community hospitals $145.4 million Location: Term: Kansas City metropolitan area 14-year initial term with two 5-year renewal options Operated and Guaranteed by: Annual Escalator: Saint Luke’s Health System Average 2% fixed escalators (1) MPT Assets (A1 / A+ rated) Other Assets • Saint Luke’s Health System is a not-for-profit healthcare operator based in Kansas City, Missouri • Currently operates 18 hospitals (including a 382-bed flagship hospital), 13 convenient care clinics and three surgery centers across the greater Kansas City region • High quality, new construction community hospitals built within the last two years • Located in high-income demographic areas on major roads / intersections within Johnson County, Kansas - the fastest growing county in the Kansas City region • New relationship between MPT and A-rated not-for-profit (with comprehensive diagnostic and treatment facilities) signifies rapidly evolving and expanding hospital market 11 1. Per Moody’s and S&P, respectively.
Halsen Healthcare Investment Properties: Investment: (1) 1 Acute care hospital $40 million Location: Term: California 15-year initial term with three 5-year renewal options Operated by: Annual Escalator: Halsen Healthcare, LLC. Greater of CPI or 2% with a ceiling of 5% • Halsen Healthcare, a newly established operator based in Orange County, CA, boasts a deeply experienced executive team comprised of former Tenet, Community Health Systems and HCA executives, whom the Company expects to grow with in the coming years • MPT’s investment in Watsonville Community Hospital, a 106-bed acute care hospital profitably serving the healthcare needs of its surrounding markets, initiates a new operator relationship for MPT • Watsonville is a coastal city located south of San Jose, a region with expected population growth of ~3% over the next five years 12 1. Real estate only. Total investment of $55mm including a working capital loan.Halsen Healthcare Investment Properties: Investment: (1) 1 Acute care hospital $40 million Location: Term: California 15-year initial term with three 5-year renewal options Operated by: Annual Escalator: Halsen Healthcare, LLC. Greater of CPI or 2% with a ceiling of 5% • Halsen Healthcare, a newly established operator based in Orange County, CA, boasts a deeply experienced executive team comprised of former Tenet, Community Health Systems and HCA executives, whom the Company expects to grow with in the coming years • MPT’s investment in Watsonville Community Hospital, a 106-bed acute care hospital profitably serving the healthcare needs of its surrounding markets, initiates a new operator relationship for MPT • Watsonville is a coastal city located south of San Jose, a region with expected population growth of ~3% over the next five years 12 1. Real estate only. Total investment of $55mm including a working capital loan.
2019 Completed Acquisitions Previously Announced2019 Completed Acquisitions Previously Announced
BMI Harbour Hospital Invested Properties: Investment: 1 Acute care hospital $45 million Location: Term: England 14 years remaining Operated by: Annual Escalator: BMI Healthcare Fixed 2.5% • 38-bed acute care hospital located in Poole, England, an affluent coastal city southwest of London • Offers orthopedic, oncology and physiotherapy services • BMI Healthcare is the largest private hospital operator in the United Kingdom • 56 hospitals with 20 facilities in London • Transaction closed April 3, 2019 13BMI Harbour Hospital Invested Properties: Investment: 1 Acute care hospital $45 million Location: Term: England 14 years remaining Operated by: Annual Escalator: BMI Healthcare Fixed 2.5% • 38-bed acute care hospital located in Poole, England, an affluent coastal city southwest of London • Offers orthopedic, oncology and physiotherapy services • BMI Healthcare is the largest private hospital operator in the United Kingdom • 56 hospitals with 20 facilities in London • Transaction closed April 3, 2019 13
Infracore Ownership Acquired: Investment: (1) 46% stake in Infracore SA $410 million Location: Operated by: Switzerland Swiss Medical Network • Infracore SA is a Swiss healthcare real estate company with real estate holdings valued at approximately $900 million • Portfolio consists of 13 acute care campuses and two additional properties across Switzerland • Hospitals are operated by the Swiss Medical Network (Switzerland’s second largest private hospital operator) • Hospitals total approximately 1.5 million square feet of high-quality assets, with an average 23 year remaining lease term • Through the acquisition, which closed on May 27, 2019, MPT became the largest shareholder in Infracore • On June 28, 2019, MPT acquired 4.9% shareholding in AEVIS VICTORIA SA which owns 19% of Infracore and wholly owns Swiss Medical Network • Investment leads to closer alignment and potential growth with Swiss Medical Network 14 1. Represents gross real estate investment.Infracore Ownership Acquired: Investment: (1) 46% stake in Infracore SA $410 million Location: Operated by: Switzerland Swiss Medical Network • Infracore SA is a Swiss healthcare real estate company with real estate holdings valued at approximately $900 million • Portfolio consists of 13 acute care campuses and two additional properties across Switzerland • Hospitals are operated by the Swiss Medical Network (Switzerland’s second largest private hospital operator) • Hospitals total approximately 1.5 million square feet of high-quality assets, with an average 23 year remaining lease term • Through the acquisition, which closed on May 27, 2019, MPT became the largest shareholder in Infracore • On June 28, 2019, MPT acquired 4.9% shareholding in AEVIS VICTORIA SA which owns 19% of Infracore and wholly owns Swiss Medical Network • Investment leads to closer alignment and potential growth with Swiss Medical Network 14 1. Represents gross real estate investment.
Healthscope Invested Properties: Investment: (1) 11 Hospitals $858 million Locations: Term: MPT Assets – 11 Sydney, Melbourne, Brisbane 20-year weighted average Other Assets – 32 and Perth initial term with multiple extension options Operated by: Annual Escalator: Healthscope Ltd. Fixed 2.5% • Healthscope is the second largest private hospital operator in Australia with 18,000 employees and 5,100 beds • Operates 43 hospitals located around large metropolitan centers, including 30 acute hospitals, seven mental health hospitals and six rehabilitation hospitals • Transaction agreements include provisions for MPT to invest up to an additional $350 million for expansion and redevelopment projects in 2019 and future years • Transaction with Healthscope closed on June 6, 2019 (transaction financed with a five-year unsecured term loan at a 2.45% fixed interest rate) 15 1. Excludes stamp duties and registration fees.Healthscope Invested Properties: Investment: (1) 11 Hospitals $858 million Locations: Term: MPT Assets – 11 Sydney, Melbourne, Brisbane 20-year weighted average Other Assets – 32 and Perth initial term with multiple extension options Operated by: Annual Escalator: Healthscope Ltd. Fixed 2.5% • Healthscope is the second largest private hospital operator in Australia with 18,000 employees and 5,100 beds • Operates 43 hospitals located around large metropolitan centers, including 30 acute hospitals, seven mental health hospitals and six rehabilitation hospitals • Transaction agreements include provisions for MPT to invest up to an additional $350 million for expansion and redevelopment projects in 2019 and future years • Transaction with Healthscope closed on June 6, 2019 (transaction financed with a five-year unsecured term loan at a 2.45% fixed interest rate) 15 1. Excludes stamp duties and registration fees.
Portfolio UpdatePortfolio Update
Portfolio Update • Steward integrated operations of IASIS and other acquisitions which Acute Care Hospital expanded the company from Massachusetts to 8 additional states, Rehabilitation Hospital increasing its portfolio to 36 hospitals from 9 facilities Non-MPT Owned Hospital • Generated substantial cost savings • Integrated operations of over 1,500 employed physician providers located in over 600 in supply chain management, labor locations optimization, and improved Medical • Expanded the network of affiliated providers from 2,700 to over 5,000 MI Group efficiencies CT • Conversion of Electronic Health Record systems to maintain the reliability and PA CA NJ IN NV consistency of electronic records and integrate billing processes to increase the speed • Further increased liquidity through at which charges are collected KS revenue cycle improvements MO • Centralization of all three corporate offices to Dallas, TX • Workforce reductions led to substantial one-time severance charges; savings to be realized in 2019 Investment $1.1 billion (3/31/2019) AL TX # of Beds 6,073 (4,520 MPT Facilities) 2018 EBITDAR Reconciliation # of Hospitals 45 (22 MPT owned) ($ in millions) Loss From Operations, Before Income Taxes ($269.2) Gain on Sale ( 36.4) Rehabilitation Hospital Depreciation and Amortization 230.8 Non-MPT Owned Hospital Interest 1 69.8 Operating Leases 212.9 EBITDAR $307.9 • Expense management initiatives realized in 2018 as Staffing and Vendor Consolidation and Integration 82.5 well as renegotiated certain payer contracts Revenue Cycle Integration Adjustments 49.5 Electronic Health Record Conversion Impact 1 33.8 • Renovated selected units across the portfolio (1) Integration Cost 8 9.5 Facility Disposal and Transition Costs 1 9.6 Investment $1.0 billion (3/31/2019) Other Non-Recurring 27.0 Adjusted EBITDAR $709.8 # of Beds 18,073 (14,435 MPT Facilities) MPT Coverage Rent / Interest $249.3 # of Hospitals 120 (77 MPT owned) Consolidated Adjusted EBITDAR Coverage 2.85x 16 Note: Steward Health Care System information provided by Steward Health Care System. MPT did not participate in the preparation of this information. 1. Includes Houston facility remediation. Portfolio Update • Steward integrated operations of IASIS and other acquisitions which Acute Care Hospital expanded the company from Massachusetts to 8 additional states, Rehabilitation Hospital increasing its portfolio to 36 hospitals from 9 facilities Non-MPT Owned Hospital • Generated substantial cost savings • Integrated operations of over 1,500 employed physician providers located in over 600 in supply chain management, labor locations optimization, and improved Medical • Expanded the network of affiliated providers from 2,700 to over 5,000 MI Group efficiencies CT • Conversion of Electronic Health Record systems to maintain the reliability and PA CA NJ IN NV consistency of electronic records and integrate billing processes to increase the speed • Further increased liquidity through at which charges are collected KS revenue cycle improvements MO • Centralization of all three corporate offices to Dallas, TX • Workforce reductions led to substantial one-time severance charges; savings to be realized in 2019 Investment $1.1 billion (3/31/2019) AL TX # of Beds 6,073 (4,520 MPT Facilities) 2018 EBITDAR Reconciliation # of Hospitals 45 (22 MPT owned) ($ in millions) Loss From Operations, Before Income Taxes ($269.2) Gain on Sale ( 36.4) Rehabilitation Hospital Depreciation and Amortization 230.8 Non-MPT Owned Hospital Interest 1 69.8 Operating Leases 212.9 EBITDAR $307.9 • Expense management initiatives realized in 2018 as Staffing and Vendor Consolidation and Integration 82.5 well as renegotiated certain payer contracts Revenue Cycle Integration Adjustments 49.5 Electronic Health Record Conversion Impact 1 33.8 • Renovated selected units across the portfolio (1) Integration Cost 8 9.5 Facility Disposal and Transition Costs 1 9.6 Investment $1.0 billion (3/31/2019) Other Non-Recurring 27.0 Adjusted EBITDAR $709.8 # of Beds 18,073 (14,435 MPT Facilities) MPT Coverage Rent / Interest $249.3 # of Hospitals 120 (77 MPT owned) Consolidated Adjusted EBITDAR Coverage 2.85x 16 Note: Steward Health Care System information provided by Steward Health Care System. MPT did not participate in the preparation of this information. 1. Includes Houston facility remediation.
AppendixAppendix
FFO Run-Rate and Gross Assets Reconciliation (1) Annual Run-Rate Guidance – Per Share Low High Net income attributable to MPT common stockholders $1.08 $1.12 Participating securities' share in earnings - - Net income, less participating securities' share in earnings $1.08 $1.12 Depreciation and amortization 0.45 0.45 Funds from operations $1.53 $1.57 Other adjustments 0.01 0.01 Normalized funds from operations $1.54 $1.58 Pro Forma Total Gross Assets Pro Forma March 31, 2019 $9,231,453 Total assets Add: 3,108,777 Completed investments since March 31, 2019 and current committed acquisitions and developments 498,915 Accumulated depreciation and amortization (2) 540,542 Incremental gross assets of our joint ventures Less: (745,548) Cash and cash equivalents (3) Pro forma total gross assets $12,634,139 1. Based on current expectations and actual results or future events may differ materially from those expressed in this table, which is a forward-looking statement within the meaning of the federal securities laws. Please refer to the forward-looking statement included in the corresponding press release and our filings with the Securities and Exchange Commission for a discussion of risk factors that affect MPT’s performance. 2. Adjustment needed to reflect MPT’s share of joint ventures' gross assets. 3. Pro forma total gross assets is total assets before accumulated depreciation/amortization, includes investments completed since March 31, 2019 and assumes real estate binding commitments on new investments and unfunded 17 amounts on development deals and commenced capital improvement projects are funded, and assumes cash on hand is used in these transactions. We believe pro forma total gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our binding commitments close and our other commitments are fully funded.FFO Run-Rate and Gross Assets Reconciliation (1) Annual Run-Rate Guidance – Per Share Low High Net income attributable to MPT common stockholders $1.08 $1.12 Participating securities' share in earnings - - Net income, less participating securities' share in earnings $1.08 $1.12 Depreciation and amortization 0.45 0.45 Funds from operations $1.53 $1.57 Other adjustments 0.01 0.01 Normalized funds from operations $1.54 $1.58 Pro Forma Total Gross Assets Pro Forma March 31, 2019 $9,231,453 Total assets Add: 3,108,777 Completed investments since March 31, 2019 and current committed acquisitions and developments 498,915 Accumulated depreciation and amortization (2) 540,542 Incremental gross assets of our joint ventures Less: (745,548) Cash and cash equivalents (3) Pro forma total gross assets $12,634,139 1. Based on current expectations and actual results or future events may differ materially from those expressed in this table, which is a forward-looking statement within the meaning of the federal securities laws. Please refer to the forward-looking statement included in the corresponding press release and our filings with the Securities and Exchange Commission for a discussion of risk factors that affect MPT’s performance. 2. Adjustment needed to reflect MPT’s share of joint ventures' gross assets. 3. Pro forma total gross assets is total assets before accumulated depreciation/amortization, includes investments completed since March 31, 2019 and assumes real estate binding commitments on new investments and unfunded 17 amounts on development deals and commenced capital improvement projects are funded, and assumes cash on hand is used in these transactions. We believe pro forma total gross assets is useful to investors as it provides a more current view of our portfolio and allows for a better understanding of our concentration levels as our binding commitments close and our other commitments are fully funded.
Exhibit 99.3
C O N D E N S E D C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S ( U N A U D I T E D )
Steward Health Care System LLC
Years Ended December 31, 2018 and 2017
Steward Health Care System LLC
Consolidated Balance Sheets
December 31 | ||||||||
2018 | 2017 | |||||||
|
|
|||||||
(Amounts in Thousands) | ||||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 74,258 | $ | 69,088 | ||||
Patient accounts receivable, less allowance for doubtful accounts of $424,396 and $135,535 in 2018 and 2017, respectively |
669,094 | 686,748 | ||||||
Other accounts receivable |
266,811 | 203,132 | ||||||
Income tax receivable |
| 63,230 | ||||||
Estimated settlements with third-party payors |
10,853 | 8,865 | ||||||
Inventories |
119,407 | 126,027 | ||||||
Prepaid expenses |
48,735 | 61,204 | ||||||
Other current assets |
19,294 | 18,922 | ||||||
|
|
|||||||
Total current assets |
1,208,452 | 1,237,216 | ||||||
Property and equipment net |
1,339,786 | 2,655,647 | ||||||
Other assets |
119,289 | 198,060 | ||||||
Goodwill and other intangible assets |
548,044 | 567,253 | ||||||
|
|
|||||||
Total assets |
$ | 3,215,571 | $ | 4,658,176 | ||||
|
|
|||||||
Liabilities and members deficit |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ | 17,875 | $ | 79,853 | ||||
Accounts payable and accrued expenses |
805,544 | 690,196 | ||||||
Accrued compensation and benefits |
239,900 | 222,635 | ||||||
Medical claims |
155,476 | 163,458 | ||||||
Estimated settlements with third-party payors |
20,221 | 16,620 | ||||||
Current portion of deferred gain |
57,639 | 6,536 | ||||||
Current portion of sale-leaseback financing obligation |
10,891 | 67,579 | ||||||
Other current liabilities |
135,016 | 105,298 | ||||||
|
|
|||||||
Total current liabilities |
1,442,562 | 1,352,175 | ||||||
Long-term debt net of current portion and debt issuance costs |
1,335,434 | 1,907,157 | ||||||
Professional liability costs |
163,923 | 138,253 | ||||||
Deferred tax liabilities |
479 | 13,204 | ||||||
Deferred gain net of current portion |
645,665 | 39,769 | ||||||
Sale-leaseback financing obligation - net of current portion |
182,622 | 1,552,311 | ||||||
Other liabilities |
654,444 | 560,088 | ||||||
|
|
|||||||
Total liabilities |
4,425,129 | 5,562,957 | ||||||
Non-controlling interests with redemption rights |
87,835 | 85,125 | ||||||
Members deficit |
(1,324,117 | ) | (1,017,634 | ) | ||||
Non-controlling interests - non-redeemable |
26,724 | 27,728 | ||||||
|
|
|||||||
Total deficit |
(1,297,393 | ) | (989,906 | ) | ||||
|
|
|||||||
Total liabilities and members deficit |
$ | 3,215,571 | $ | 4,658,176 | ||||
|
|
Steward Health Care System LLC
Consolidated Statements of Operations
Year Ended December 31 | ||||||||
2018 | 2017 | |||||||
|
|
|||||||
(Amounts in Thousands) | ||||||||
Net patient service revenue |
$ | 5,434,043 | $ | 3,327,312 | ||||
Less provision for bad debts |
(580,378 | ) | (284,765 | ) | ||||
|
|
|||||||
Net patient service revenue, less provision for bad debts |
4,853,665 | 3,042,547 | ||||||
Premium revenue |
1,449,638 | 465,651 | ||||||
Other revenue |
322,886 | 197,443 | ||||||
|
|
|||||||
Total revenues |
6,626,189 | 3,705,641 | ||||||
Expenses: |
||||||||
Salaries, wages, and fringe benefits |
2,744,635 | 1,780,182 | ||||||
Supplies and other expenses |
2,628,183 | 1,561,051 | ||||||
Medical claims expense |
1,151,875 | 363,978 | ||||||
Depreciation and amortization |
230,802 | 154,772 | ||||||
Interest |
169,777 | 108,604 | ||||||
Transaction expenses |
| 49,792 | ||||||
Gain on sale-leaseback transaction, net |
(3,931 | ) | | |||||
Gain on sale of assets and business |
(31,274 | ) | | |||||
Reorganization expenses |
5,308 | 8,859 | ||||||
|
|
|||||||
Total expenses |
6,895,375 | 4,027,238 | ||||||
|
|
|||||||
Loss from operations |
(269,186 | ) | (321,597 | ) | ||||
Other non-operating income, net |
(403 | ) | (2,223 | ) | ||||
|
|
|||||||
Loss before income taxes |
(268,783 | ) | (319,374 | ) | ||||
Income tax expense (benefit) |
10,764 | (112,193 | ) | |||||
|
|
|||||||
Net loss |
(279,547 | ) | (207,181 | ) | ||||
Net loss (earnings) attributable to non-controlling interests |
8,443 | (248 | ) | |||||
|
|
|||||||
Net loss attributable to Steward Health Care System LLC |
$ | (271,104 | ) | $ | (207,429 | ) | ||
|
|
Steward Health Care System LLC
Consolidated Statements of Comprehensive Loss
Year Ended December 31 | ||||||||
2018 | 2017 | |||||||
|
|
|||||||
(Amounts in Thousands) | ||||||||
Net loss |
$ | (279,547) | $ | (207,181) | ||||
Other comprehensive loss: |
||||||||
Unrealized loss on available-for-sale securities |
(5,950) | | ||||||
Pension liability adjustment |
(1,392) | (2,065) | ||||||
|
|
|||||||
Other comprehensive loss before income taxes |
(7,342) | (2,065) | ||||||
Income tax expense |
| | ||||||
|
|
|||||||
Total other comprehensive loss, net of tax |
(7,342) | (2,065) | ||||||
Net loss (earnings) attributable to non-controlling interests |
8,443 | (248) | ||||||
|
|
|||||||
Comprehensive loss attributable to Steward Health Care System LLC |
$ | (278,446) | $ | (209,494) | ||||
|
|
Steward Health Care System LLC
Consolidated Statements of Changes in Members Deficit
Members Deficit | ||||||||||||||||
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Non- controlling |
Total Deficit |
|||||||||||||
|
|
|||||||||||||||
(Amounts in Thousands) | ||||||||||||||||
BALANCE, JANUARY 1, 2017 |
$ | (908,524 | ) | $ | (1,707 | ) | $ | - | $ | (910,231 | ) | |||||
Net (loss) income |
(207,429 | ) | - | 1,189 | (206,240 | ) | ||||||||||
Pension liability adjustment |
- | (2,065 | ) | - | (2,065 | ) | ||||||||||
Non-controlling interests acquired |
- | - | 26,539 | 26,539 | ||||||||||||
Issuance of convertible preferred interests |
100,000 | - | - | 100,000 | ||||||||||||
Distributions |
(89 | ) | - | - | (89 | ) | ||||||||||
Equity-based compensation expense |
2,180 | - | - | 2,180 | ||||||||||||
|
|
|||||||||||||||
BALANCE, DECEMBER 31, 2017 |
$ | (1,013,862 | ) | $ | (3,772 | ) | $ | 27,728 | $ | (989,906 | ) | |||||
Net (loss) income |
(271,104 | ) | - | 3,196 | (267,908 | ) | ||||||||||
Pension liability adjustment |
- | (1,392 | ) | - | (1,392 | ) | ||||||||||
Unrealized loss on available-for-sale securities |
- | (5,950 | ) | - | (5,950 | ) | ||||||||||
Repurchase of equity |
(5,275 | ) | - | - | (5,275 | ) | ||||||||||
Distributions |
- | - | (4,200 | ) | (4,200 | ) | ||||||||||
Adjustment to redemption value of non-controlling interests with redemption rights |
(24,942 | ) | - | - | (24,942 | ) | ||||||||||
Equity-based compensation expense |
2,180 | - | - | 2,180 | ||||||||||||
|
|
|||||||||||||||
BALANCE, DECEMBER 31, 2018 |
$ | (1,313,003 | ) | $ | (11,114 | ) | $ | 26,724 | $ | (1,297,393 | ) | |||||
|
|
Steward Health Care System LLC
Consolidated Statements of Cash Flows
Year Ended December 31 | ||||||||
2018 | 2017 | |||||||
|
|
|||||||
Operating Activities | (Amounts in Thousands) | |||||||
Net loss |
$ | (279,547 | ) | $ | (207,181 | ) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||
Depreciation and amortization |
230,802 | 154,772 | ||||||
Provision for bad debts |
580,378 | 284,765 | ||||||
Equity-based compensation expense |
2,180 | 2,180 | ||||||
Deferred tax, net |
(29,589 | ) | (244,051 | ) | ||||
Non-cash interest expense |
7,963 | 2,342 | ||||||
Amortization of deferred gains |
(15,093 | ) | (6,214 | ) | ||||
Gain on sale-leaseback transaction, net |
(3,931 | ) | | |||||
Gain on sale of assets and business |
(31,274 | ) | (1,953 | ) | ||||
Other |
| (6,682 | ) | |||||
Increase (decrease) in cash resulting from a change in: |
||||||||
Patient accounts receivable |
(563,349 | ) | (315,064 | ) | ||||
Establishment of accounts receivable of recent acquisitions |
| (128,634 | ) | |||||
Other assets |
73,516 | (50,816 | ) | |||||
Accounts payable, accrued expenses, and other liabilities |
267,598 | 494,372 | ||||||
|
|
|||||||
Net cash provided by (used in) operating activities |
239,654 | (22,164 | ) | |||||
Investing Activities |
||||||||
Purchase of property and equipment |
(200,895 | ) | (83,403 | ) | ||||
Proceeds from sale of assets and business |
57,851 | | ||||||
Purchase of available-for-sale securities |
(7,500 | ) | | |||||
Cost of acquisitions, net of cash acquired |
(1,082 | ) | (440,623 | ) | ||||
Increase in noncurrent other assets |
(4,413 | ) | (51,209 | ) | ||||
|
|
|||||||
Net cash used in investing activities |
(156,039 | ) | (575,235 | ) | ||||
Financing Activities |
||||||||
Payment of debt issuance costs |
| (16,598 | ) | |||||
Proceeds from issuance of debt |
38,648 | 15,000 | ||||||
Proceeds under revolving credit facility |
30,000 | 650,000 | ||||||
Payments under revolving credit facility |
(80,000 | ) | (35,000 | ) | ||||
Repayments of debt and capital lease obligations |
(87,448 | ) | (65,994 | ) | ||||
Distributions |
(12,320 | ) | (89 | ) | ||||
Proceeds from preferred equity issuance |
| 100,000 | ||||||
Net proceeds from sale-leaseback transaction |
42,823 | | ||||||
Repurchases of equity interests |
(5,275 | ) | | |||||
Cash paid for the repurchase of non-controlling interests |
(2,348 | ) | | |||||
Other |
(2,525 | ) | (745 | ) | ||||
|
|
|||||||
Net cash (used in) provided by financing activities |
(78,445 | ) | 646,574 | |||||
|
|
|||||||
Net increase in cash and cash equivalents |
5,170 | 49,175 | ||||||
Cash and cash equivalents at beginning of year |
69,088 | 19,913 | ||||||
|
|
|||||||
Cash and cash equivalents at end of year |
$ | 74,258 | $ | 69,088 | ||||
|
|
Steward Health Care System LLC
Consolidated Statements of Cash Flows (continued)
2018 | 2017 | |||||||
|
|
|||||||
Supplemental disclosure of cash flow information |
(Amounts in Thousands) | |||||||
Cash paid for interest |
$ | 168,025 | $ | 95,640 | ||||
|
|
|||||||
Net cash paid for income taxes |
$ | | $ | 58,561 | ||||
|
|
|||||||
Supplemental schedule of non-cash investing and financing activity |
||||||||
Purchase of property and equipment financed by capital leases |
$ | 11,399 | $ | 37,735 | ||||
|
|
|||||||
Reduction of financing obligations resulting from qualifying for sale-leaseback accounting |
$ | 2,016,881 | $ | | ||||
|
|
|||||||
Non-cash financing to fund acquisitions |
$ | | $ | 1,711,300 | ||||
|
|