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Welltower (WELL) Down 2.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Welltower (WELL - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Welltower due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Welltower Q1 FFO Beats Estimates, Occupancy Up in April
Welltower reported normalized FFO per share of 80 cents in first-quarter 2021, which surpassed the Zacks Consensus Estimate of 75 cents. However, the reported figure compares unfavorably with the year-ago quarter’s $1.02.
Moreover, it generated revenues of $1.05 billion, which missed the Zacks Consensus Estimate of $1.09 billion. The top line also declined 16.4% year over year.
The company’s SHO portfolio continued to be affected by the coronavirus pandemic. In fact, a decline in rental income, and revenues from resident fees and services impeded top-line growth.
Concurrent with the first-quarter earnings release, Welltower announced that it provided a £540-million ($750 million) senior secured loan, a £55-million ($76 million) equity investment and a £30-million ($42 million) delayed facility to a Safanad-led investment group to recapitalize HC-One. HC-One is the largest UK-based seniors housing operating platform.
Moreover, it announced that in the reported quarter, the company delivered two medical office buildings in Charlotte, NC, spanning more than 280,000 square feet of space. Markedly, both buildings are fully master-leased to Atrium Health for 15 years.
Quarter in Details
Welltower's pro-rata gross investments in the first quarter totaled $368 million. This included $209 million in acquisitions, $121 million in development funding and $38 million of loan funding.
From the beginning of the year through Apr 27, the company completed $1.3 billion of pro-rata gross investments, exclusive of development funding.
Apart from this, the company completed property dispositions of $216 million.
Balance Sheet Position
It exited the quarter with $2.1 billion of cash and cash equivalents, up from $303.4 million recorded in the prior-year quarter.
As of Apr 27, the company had near-term liquidity of $4 billion and no material senior unsecured note maturities until 2024.
COVID-19 Update
The company’s SHO portfolio witnessed a spot occupancy sequential decline of 230 bps to 73.6% in March from 75.9% in December.
Nonetheless, the rapid distribution of COVID-19 vaccinations at assisted living and memory care facilities in the United States and the U.K. has reduced total resident case counts and 99% of Welltower’s communities are now accepting new residents. This has resulted in higher move-in activity and occupancy growth in recent weeks. In fact, from Apr 1 till Apr 23, SHO portfolio occupancy improved nearly 20 bps.
For second-quarter 2021, occupancy is expected to sequentially increase 130 bps.
Further, Welltower collected 96% of first-quarter rents from its triple-net lease operators. In its outpatient medical segment, the company collected 99% of first-quarter rents.
Guidance
The company expects second-quarter 2021 normalized FFO per share of 72-77 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Welltower has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Welltower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Welltower (WELL) Down 2.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Welltower (WELL - Free Report) . Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Welltower due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Welltower Q1 FFO Beats Estimates, Occupancy Up in April
Welltower reported normalized FFO per share of 80 cents in first-quarter 2021, which surpassed the Zacks Consensus Estimate of 75 cents. However, the reported figure compares unfavorably with the year-ago quarter’s $1.02.
Moreover, it generated revenues of $1.05 billion, which missed the Zacks Consensus Estimate of $1.09 billion. The top line also declined 16.4% year over year.
The company’s SHO portfolio continued to be affected by the coronavirus pandemic. In fact, a decline in rental income, and revenues from resident fees and services impeded top-line growth.
Concurrent with the first-quarter earnings release, Welltower announced that it provided a £540-million ($750 million) senior secured loan, a £55-million ($76 million) equity investment and a £30-million ($42 million) delayed facility to a Safanad-led investment group to recapitalize HC-One. HC-One is the largest UK-based seniors housing operating platform.
Moreover, it announced that in the reported quarter, the company delivered two medical office buildings in Charlotte, NC, spanning more than 280,000 square feet of space. Markedly, both buildings are fully master-leased to Atrium Health for 15 years.
Quarter in Details
Welltower's pro-rata gross investments in the first quarter totaled $368 million. This included $209 million in acquisitions, $121 million in development funding and $38 million of loan funding.
From the beginning of the year through Apr 27, the company completed $1.3 billion of pro-rata gross investments, exclusive of development funding.
Apart from this, the company completed property dispositions of $216 million.
Balance Sheet Position
It exited the quarter with $2.1 billion of cash and cash equivalents, up from $303.4 million recorded in the prior-year quarter.
As of Apr 27, the company had near-term liquidity of $4 billion and no material senior unsecured note maturities until 2024.
COVID-19 Update
The company’s SHO portfolio witnessed a spot occupancy sequential decline of 230 bps to 73.6% in March from 75.9% in December.
Nonetheless, the rapid distribution of COVID-19 vaccinations at assisted living and memory care facilities in the United States and the U.K. has reduced total resident case counts and 99% of Welltower’s communities are now accepting new residents. This has resulted in higher move-in activity and occupancy growth in recent weeks. In fact, from Apr 1 till Apr 23, SHO portfolio occupancy improved nearly 20 bps.
For second-quarter 2021, occupancy is expected to sequentially increase 130 bps.
Further, Welltower collected 96% of first-quarter rents from its triple-net lease operators. In its outpatient medical segment, the company collected 99% of first-quarter rents.
Guidance
The company expects second-quarter 2021 normalized FFO per share of 72-77 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Welltower has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Welltower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.