We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What's in Store for Diversified Healthcare's (DHC) Q2 Earnings?
Read MoreHide Full Article
Diversified Healthcare Trust (DHC - Free Report) is set to report second-quarter 2023 results on Aug 1 after the closing bell. The quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Newton, MA-based healthcare real estate investment trust (REIT) delivered normalized FFO per share of 5 cents, in line with the Zacks Consensus Estimate.
Over the trailing four quarters, Diversified Healthcare pulled off an average FFO per share surprise of 33.33%.The graph below depicts the surprise history of the company:
Diversified Healthcare Trust Price and EPS Surprise
During the second quarter, Diversified Healthcare’s senior housing operating portfolio (SHOP) is likely to have capitalized on the positive healthcare expenditure trend of senior citizens, which is generally higher than the average population. Healthy move-in activity during the quarter is expected to have boosted occupancy levels for this segment.
Also, the SHOP segment is experiencing positive revenue trends and improving expense trends on the back of lower agency costs. This is expected to have aided the segment’s net operating income (NOI) growth during the to-be-reported quarter. Further, a decline in construction starts and muted new supply are likely to have been a boon.
Per the company’s latest monthly SHOP performance update, occupancy for June 2023 was 78.7%, up 60 basis points (bps) from May 2023. The NOI for June increased 22% sequentially to $7.2 million while the NOI margin rose 130 bps to 7.7%.
Speaking of DHC’s well-located medical office and life science building, this segment is expected to have witnessed healthy leasing activity during the quarter, boosting the company’s top line.
The Zacks Consensus Estimate for second-quarter resident fees and services is pegged at $285.9 million, indicating an increase of 2.3% from the previous quarter’s reported number of $279.6 million and 14.1% from the year-ago quarter’s $250.5 million.
The consensus estimate for quarterly rental income stands at $67.2 million, up from $66.4 million reported in the prior quarter and $62.5 million in the year-ago quarter.
The consensus mark for second-quarter revenues is pegged at $353.2 million, indicating a 12.8% increase from the prior-year quarter’s reported figure.
However, DHC’s debt covenants and constrained financial flexibility are likely to have forced it to defer capital investments required to boost the SHOP’s recovery, adversely impacting its quarterly performance to some extent.
The Zacks Consensus Estimate for quarterly FFO per share has been unchanged at 9 cents over the past two months. The figure, however, suggests a significant increase year over year.
Q2 Developments
In April 2023, Diversified Healthcare Trust and Office Properties Income Trust (OPI - Free Report) entered into a definitive merger agreement wherein all of the former’s outstanding common shares will be acquired by OPI in an all-share transaction. Per the agreement terms, DHC shareholders will receive 0.147 shares of OPI for each common share of DHC based on a fixed exchange ratio. This represents an implied value of $1.70 per DHC common share and a 20% premium to the average closing price for the 30 trading days ended on Apr 10, 2023.
The transaction, expected to close during the third quarter of 2023 subject to the approval of DHC and OPI shareholders and other customary closing conditions, is anticipated to be accretive to DHC shareholders immediately on a pro-rata basis, resulting in annual general and administrative savings of approximately $2 million to $3 million.
Earnings Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Diversified Healthcare Trust this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: DHC has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Hudson Pacific Properties (HPP - Free Report) is slated to report quarterly numbers on Aug 1. HPP has an Earnings ESP of +2.22% and carries a Zacks Rank #3 presently.
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 currently.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
What's in Store for Diversified Healthcare's (DHC) Q2 Earnings?
Diversified Healthcare Trust (DHC - Free Report) is set to report second-quarter 2023 results on Aug 1 after the closing bell. The quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
In the last reported quarter, this Newton, MA-based healthcare real estate investment trust (REIT) delivered normalized FFO per share of 5 cents, in line with the Zacks Consensus Estimate.
Over the trailing four quarters, Diversified Healthcare pulled off an average FFO per share surprise of 33.33%.The graph below depicts the surprise history of the company:
Diversified Healthcare Trust Price and EPS Surprise
Diversified Healthcare Trust price-eps-surprise | Diversified Healthcare Trust Quote
Factors to Note
During the second quarter, Diversified Healthcare’s senior housing operating portfolio (SHOP) is likely to have capitalized on the positive healthcare expenditure trend of senior citizens, which is generally higher than the average population. Healthy move-in activity during the quarter is expected to have boosted occupancy levels for this segment.
Also, the SHOP segment is experiencing positive revenue trends and improving expense trends on the back of lower agency costs. This is expected to have aided the segment’s net operating income (NOI) growth during the to-be-reported quarter. Further, a decline in construction starts and muted new supply are likely to have been a boon.
Per the company’s latest monthly SHOP performance update, occupancy for June 2023 was 78.7%, up 60 basis points (bps) from May 2023. The NOI for June increased 22% sequentially to $7.2 million while the NOI margin rose 130 bps to 7.7%.
Speaking of DHC’s well-located medical office and life science building, this segment is expected to have witnessed healthy leasing activity during the quarter, boosting the company’s top line.
The Zacks Consensus Estimate for second-quarter resident fees and services is pegged at $285.9 million, indicating an increase of 2.3% from the previous quarter’s reported number of $279.6 million and 14.1% from the year-ago quarter’s $250.5 million.
The consensus estimate for quarterly rental income stands at $67.2 million, up from $66.4 million reported in the prior quarter and $62.5 million in the year-ago quarter.
The consensus mark for second-quarter revenues is pegged at $353.2 million, indicating a 12.8% increase from the prior-year quarter’s reported figure.
However, DHC’s debt covenants and constrained financial flexibility are likely to have forced it to defer capital investments required to boost the SHOP’s recovery, adversely impacting its quarterly performance to some extent.
The Zacks Consensus Estimate for quarterly FFO per share has been unchanged at 9 cents over the past two months. The figure, however, suggests a significant increase year over year.
Q2 Developments
In April 2023, Diversified Healthcare Trust and Office Properties Income Trust (OPI - Free Report) entered into a definitive merger agreement wherein all of the former’s outstanding common shares will be acquired by OPI in an all-share transaction. Per the agreement terms, DHC shareholders will receive 0.147 shares of OPI for each common share of DHC based on a fixed exchange ratio. This represents an implied value of $1.70 per DHC common share and a 20% premium to the average closing price for the 30 trading days ended on Apr 10, 2023.
The transaction, expected to close during the third quarter of 2023 subject to the approval of DHC and OPI shareholders and other customary closing conditions, is anticipated to be accretive to DHC shareholders immediately on a pro-rata basis, resulting in annual general and administrative savings of approximately $2 million to $3 million.
Earnings Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for Diversified Healthcare Trust this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: DHC has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: DHC currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Hudson Pacific Properties (HPP - Free Report) is slated to report quarterly numbers on Aug 1. HPP has an Earnings ESP of +2.22% and carries a Zacks Rank #3 presently.
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.