Why Medical Properties Trust Stock Soared Today

What happened

Shares of Medical Properties Trust (MPW -1.10%) soared 7.7% on Thursday. The big gain came after the healthcare real estate investment trust (REIT) reported its first-quarter results before the market opened.

Medical Properties Trust announced net income for the first quarter of $33 million, or $0.05 per diluted share. This reflected a steep decline from earnings of $632 million, or $1.05 per diluted share, in the prior-year period.

The company posted normalized funds from operations (NFFO) in Q1 of $222 million, or $0.37 per diluted share. This result was lower than the NFFO of $282 million, or $0.47 per diluted share, recorded in the same period in 2022. However, it was enough to meet the consensus estimate.

Medical Properties Trust also lowered its full-year 2023 guidance. It now forecasts earnings of $0.06 to $0.17 per share, down from its previous guidance of earnings between $0.83 and $0.98 per share. The company looks for NFFO per share in 2023 of $1.50 to $1.61. It previously projected NFFO per share for the year in the range of $1.50 to $1.65. 

So what

The most important thing for Medical Properties Trust with its Q1 update was that there were no negative surprises. Investors already anticipated a revision to guidance as the result of the company's sale of its Australian hospitals.

Any expectations that the REIT would be forced to cut its dividend were also shot down. Medical Properties Trust announced that it would pay a quarterly dividend of $0.29 per share on July 13, 2023, to stockholders of record on June 15. 

Now what

Prime Healthcare notified Medical Properties Trust in March that it intends to exercise its right to buy back three hospitals in Kansas and Texas in the third quarter of 2023. This transaction should generate around $100 million for the company. 

There's also reason to be optimistic about Medical Properties Trust's chances of recovering money from Prospect Medical, which is behind on its rent payments. Prospect's liquidity could be improved with a binding commitment from a third-party lender.