10-QPeriod: Q1 FY2023

WELLTOWER INC. Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 3, 2023For Securities:WELL

Summary

Welltower Inc. (WELL) reported its first-quarter 2023 financial results, showcasing a robust increase in revenues driven by strong performance in its Seniors Housing Operating segment. Total revenues rose by 12% year-over-year to $1.56 billion, with Resident fees and services up 14% and Rental income up 8%. Net income attributable to common stockholders decreased to $25.7 million ($0.05 per diluted share) compared to $61.9 million ($0.14 per diluted share) in the prior year period, primarily due to higher depreciation and amortization expenses, and increased interest expenses. The company demonstrated solid operational execution, with Consolidated Net Operating Income (NOI) increasing by 11% to $603 million. Same-store NOI (SSNOI) also showed healthy growth, with Seniors Housing Operating SSNOI up 19.3% and Outpatient Medical up 1.9%. Welltower continued its strategic capital deployment, with significant investments in acquisitions and development, while also managing its capital structure effectively, maintaining a net debt to market capitalization ratio of 28% and ample liquidity of approximately $4.6 billion.

Financial Highlights

40 data points
Beta

Revenue

$1.56B

38.6% Gross Margin

Net Income

$25.67M

1.6% Net Margin

EPS (Diluted)

$0.05

Total Assets

$38.49B

Cash & Equivalents

$571.90M

Free Cash Flow

$376.06M

Financial Statements
Beta
Revenue$1.56B
Cost of Revenue$957.75M
Gross Profit$602.98M
SG&A Expenses$44.37M
Operating Expenses$1.52B
Interest Expense$144.40M
Net Income$25.67M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)492.06M
Shares Outstanding (Diluted)494.49M

Key Highlights

  • 1Total revenues increased by 12% year-over-year to $1.56 billion, driven by strong growth in the Seniors Housing Operating segment.
  • 2Consolidated Net Operating Income (NOI) grew by 11% to $603 million, indicating healthy property-level performance.
  • 3Same-store NOI (SSNOI) showed positive trends, with Seniors Housing Operating SSNOI up 19.3% and Outpatient Medical up 1.9%, reflecting operational improvements and market recovery.
  • 4The company invested significantly in real estate acquisitions and development, deploying $720.3 million in cash for new investments during the quarter.
  • 5Welltower maintained a strong capital position with $571.9 million in cash and cash equivalents and $4 billion in available borrowing capacity under its unsecured revolving credit facility.
  • 6Net income attributable to common stockholders decreased to $25.7 million ($0.05 per diluted share) from $61.9 million ($0.14 per diluted share) in Q1 2022, impacted by higher depreciation and interest expenses.
  • 7The company declared a quarterly dividend of $0.61 per share, continuing its track record of consistent shareholder returns.

Frequently Asked Questions

The primary driver of revenue growth was the strong performance in the Seniors Housing Operating segment, which saw a 14% increase in Resident fees and services, contributing significantly to the overall 12% year-over-year revenue increase.

Net income attributable to common stockholders decreased due to an increase in expenses, notably higher depreciation and amortization (up 11.5%) and increased interest expense (up 18%). These factors, coupled with a lower gain on real estate dispositions compared to the prior year, impacted the net income.

Welltower maintained a healthy capital structure with a net debt to market capitalization ratio of 28%. The company had approximately $4.6 billion in total near-term available liquidity as of March 31, 2023, comprising $571.9 million in cash and cash equivalents and $4 billion in available borrowing capacity under its unsecured revolving credit facility, positioning it well for ongoing investments and operational needs.

The Seniors Housing Operating segment showed a positive trend in average occupancy, increasing to 79.0% in Q1 2023 from 78.3% in Q4 2022 and 76.3% in Q1 2022. This upward trend in occupancy, alongside a 19.3% increase in same-store NOI (SSNOI), suggests a recovering market and positive operational momentum for this segment.