10-QPeriod: Q1 FY2021

WELLTOWER INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 29, 2021For Securities:WELL

Summary

Welltower Inc. (WELL) reported its first-quarter 2021 financial results, showing a decrease in revenues and net income compared to the same period in 2020. This decline is largely attributed to the ongoing impacts of the COVID-19 pandemic, which affected occupancy rates in its Seniors Housing Operating segment and, to a lesser extent, its Triple-net segment. Despite these challenges, the company demonstrated resilience with strong rent collection rates from its Triple-net and Outpatient Medical tenants. Financially, Welltower strengthened its capital position by issuing new senior unsecured notes and using the proceeds to redeem older, higher-interest debt. The company maintained a healthy liquidity position with substantial cash and available borrowing capacity. Management is actively managing its portfolio through strategic dispositions and a focus on its core business segments, while closely monitoring the evolving impact of the pandemic on its operations and tenants.

Financial Highlights

40 data points
Beta

Revenue

$1.05B

41.3% Gross Margin

Net Income

$71.55M

6.8% Net Margin

EPS (Diluted)

$0.17

Total Assets

$32.99B

Cash & Equivalents

$2.13B

Free Cash Flow

$303.66M

Financial Statements
Beta
Revenue$1.05B
Cost of Revenue$617.33M
Gross Profit$434.74M
SG&A Expenses$29.93M
Operating Expenses$1.05B
Interest Expense$123.14M
Net Income$71.55M
EPS (Basic)$0.17
EPS (Diluted)$0.17
Shares Outstanding (Basic)417.24M
Shares Outstanding (Diluted)419.08M

Key Highlights

  • 1Total revenues decreased by approximately 16.4% to $1,052.1 million for the three months ended March 31, 2021, compared to $1,258.6 million for the same period in 2020, primarily due to lower rental income and resident fees, impacted by occupancy declines from COVID-19.
  • 2Net income attributable to common stockholders decreased significantly to $71.5 million ($0.17 per diluted share) for the three months ended March 31, 2021, down from $310.3 million ($0.75 per diluted share) in the prior year's period.
  • 3The company reported a spot occupancy rate of 73.6% as of March 31, 2021, a slight decrease from 75.9% as of December 31, 2020, indicating continued pandemic-related challenges in the Seniors Housing Operating segment.
  • 4Welltower collected approximately 96% of rent due from Triple-net operators and 99% from Outpatient Medical tenants in Q1 2021, demonstrating strong tenant payment performance.
  • 5The company issued $750 million in senior unsecured notes with a 2.80% interest rate in March 2021 and subsequently redeemed older notes, aiming to optimize its debt structure and reduce interest expense.
  • 6Total assets increased to $32.99 billion as of March 31, 2021, from $32.48 billion as of December 31, 2020. This growth was supported by a substantial increase in cash and cash equivalents, which rose to $2.13 billion from $1.55 billion.
  • 7Despite a challenging operating environment, the company declared a quarterly cash dividend of $0.61 per share for Q1 2021, continuing its history of consistent dividend payments.

Frequently Asked Questions

The COVID-19 pandemic significantly impacted Welltower's Q1 2021 results, primarily by reducing occupancy rates in its Seniors Housing Operating segment, leading to lower resident fees and services revenue. While property operating expenses in this segment saw a net benefit due to reimbursements and decreased activity, the overall revenue decline was substantial. The Triple-net segment also experienced occupancy declines which, coupled with rent collection assessments, impacted revenue.

Welltower proactively managed its debt by issuing $750 million of senior unsecured notes in March 2021 at a 2.80% interest rate. The proceeds were used to redeem older, higher-interest senior unsecured notes in April 2021. The company maintained a strong liquidity position with over $2.1 billion in cash and cash equivalents and significant availability under its credit facilities.

While occupancy remained challenging at 73.6% as of March 31, 2021, there were signs of improvement. The company noted that approximately 99% of communities were accepting new residents, and occupancy had increased by about 60 basis points from a pandemic low in mid-March to late April 2021. The successful vaccination of residents in U.S. and U.K. facilities has also led to a significant decrease in resident case counts, suggesting a potential for recovery.

Welltower collected approximately 96% of rent due from its Triple-net operators in Q1 2021, indicating strong overall payment performance. The company evaluates leases individually and recognizes rent on a cash basis if collectibility is not probable. No significant rent deferrals or concessions were made in the quarter, though the company continues to monitor the situation closely, particularly for long-term/post-acute care facilities which have experienced higher occupancy declines.