Breaking Down Community Healthcare Trust Incorporated (CHCT) Financial Health: Key Insights for Investors

If you're looking at Community Healthcare Trust Incorporated, you need to look past the headline numbers and see the underlying asset strategy, especially since their Q3 2025 results landed. The Real Estate Investment Trust (REIT) reported Adjusted Funds From Operations (AFFO) of $0.56 per diluted share for the quarter, which is a solid beat against the consensus FFO estimate of $0.54, but their net income was only about $1.6 million, or $0.03 per diluted share, showing the complexity of REIT accounting. Still, the growth story is in the portfolio: they just acquired a Florida inpatient rehabilitation facility for approximately $26.5 million, expecting a roughly 9.4% return, plus they have another $146.0 million in definitive purchase agreements lined up for future growth, which is defintely a significant capital deployment. For the full year, consensus revenue estimates hover around $121.17 million, and the annualized dividend of $1.90 per share, based on the latest $0.4750 quarterly declaration, shows management is committed to that consistent payout. We're going to break down what these numbers mean for cash flow and why the current acquisition pipeline is the real signal for long-term investors.

Revenue Analysis

You need a clear picture of where Community Healthcare Trust Incorporated (CHCT) makes its money, especially with the market focusing on stability in healthcare real estate investment trusts (REITs). The direct takeaway is that CHCT's revenue engine is solid, driven almost entirely by rental income, and it delivered a strong Q3 2025, beating expectations.

For the third quarter of 2025, total revenue was $31.09 million, which was a beat over the consensus estimate of $30.58 million. That's a good sign. The core of their business, as a healthcare REIT, is simple: collecting rent from a diverse portfolio of medical facilities. This is a business built on long-term leases.

Primary Revenue Sources and Contribution

CHCT's revenue is overwhelmingly concentrated in one segment: rental income from its portfolio of healthcare properties. This includes hospitals, medical office buildings, and rehabilitation centers. In Q3 2025, this segment was the clear driver of the top line, with a minor component coming from other sources. Here's the quick math for the quarter ended September 30, 2025:

• Rental Income: $30.81 million
• Other Operating Interest, Net: $0.27 million

The rental income segment contributed over 99% of the total revenue, which is typical for a focused REIT. This concentration means you need to defintely keep an eye on tenant credit quality and lease expiration schedules. You can check out their long-term strategy in the Mission Statement, Vision, & Core Values of Community Healthcare Trust Incorporated (CHCT).

Year-over-Year Growth and Trends

The company demonstrated healthy near-term growth, primarily fueled by strategic acquisitions. Total revenue for Q3 2025 grew 4.9% year-over-year (YoY) from $29.6 million in Q3 2024. Looking at the trailing twelve months (TTM) as of Q3 2025, the total revenue reached $119.55 million, representing a 3.40% increase YoY. Analysts project the full fiscal year 2025 revenue to land around $121.59 million.

The table below shows the recent quarterly performance, highlighting the growth trajectory:

This growth rate, while not explosive, is solid for a REIT in the current high-interest rate environment. It shows they are successfully integrating new properties into the portfolio.

Analysis of Significant Revenue Changes

The biggest change and risk to watch is the issue with a single tenant, a geriatric behavioral hospital operator, which leases six properties. In Q2 2025, this situation forced a $1.7 million reversal of interest receivable, which temporarily depressed that quarter's reported revenue. This is a clear example of a concentration risk, even with a diversified property type portfolio.

Still, management is being proactive. In Q3 2025, the tenant paid approximately $0.2 million in rent and interest, and a sale of the tenant's business is being explored, which could lead to new leases with a more stable behavioral healthcare provider. Plus, CHCT is pushing forward with its acquisition strategy, which is the long-term revenue buffer. They closed on an inpatient rehab facility for $26.5 million in Q3 2025, expecting a strong annual return of around 9.4%. That's how you offset tenant risk.

Action Item: Monitor the status of the geriatric behavioral hospital tenant's sale and subsequent lease agreements in the Q4 2025 earnings call.

Profitability Metrics

You need to know where Community Healthcare Trust Incorporated (CHCT) is making and, more importantly, losing money. The quick takeaway is that their core real estate model is highly profitable, but high overhead and one-time tenant issues have crushed the bottom line in 2025, creating extreme volatility. We're looking at a tale of two margins.

In the second quarter of 2025 alone, the net result swung from a solid gross profit to a significant net loss, which is a huge red flag for investors. That's a lot of risk to manage.

Here's the quick math on the most recent quarterly data, which gives you the clearest picture of their current financial performance:

To be fair, the third quarter of 2025 showed a rebound with net income of approximately $1.6 million on revenue of about $31.1 million, resulting in a net profit margin of roughly 5.14%. This volatility is the core issue.

Gross Margin vs. Operating Efficiency

The gross profit margin is stellar at nearly 80.78% in Q2 2025. This high margin is typical for a real estate investment trust (REIT) that uses a triple-net lease (NNN) structure, where the tenant covers most property operating expenses like maintenance, insurance, and taxes. This model delivers a predictably high return on revenue, aligning perfectly with the Mission Statement, Vision, & Core Values of Community Healthcare Trust Incorporated (CHCT).

But then you hit the operating profit margin, which plummeted to just 7.08% in Q2 2025. The problem isn't the property itself; it's the costs to run the company. The broader REIT industry average operating margin (TTM) is around 29.13%, so Community Healthcare Trust is lagging significantly here. This gap points directly to operational inefficiencies, specifically in cost management.

• Watch G&A: General and administrative expenses need closer scrutiny.
• Control costs: High operating expenses are eating into core profitability.
• Improve efficiency: A 7.08% operating margin is defintely too thin for a REIT.

Net Profit Volatility and Near-Term Risks

The net profit margin is a mess, swinging from a loss of -41.82% in Q2 2025 to a positive 5.14% in Q3 2025. This isn't a business cycle; it's a direct result of one-time charges. The Q2 net loss of $-12.6 million was driven by a large credit loss provision and a one-time severance expense of $5.9 million related to executive retirement. This shows how susceptible the bottom line is to tenant challenges and internal restructuring costs.

What this estimate hides is the true, normalized earnings power. If you strip out those one-time charges, the underlying profitability is much better, but the fact remains that these non-recurring events still hit the cash flow. Your action here is to demand clarity on the risk profile of their largest tenants, because another credit loss provision could easily wipe out a full quarter's worth of net income.

Debt vs. Equity Structure

You need to know how Community Healthcare Trust Incorporated (CHCT) funds its growth, because a company's capital structure is a primary indicator of risk. Simply put, CHCT is leaning heavily on debt right now, which is common for a Real Estate Investment Trust (REIT) but pushes their leverage metrics well above industry benchmarks.

As of the third quarter of 2025, Community Healthcare Trust Incorporated's total net debt stood at approximately $530.1 million. This debt is primarily used to acquire and develop their portfolio of healthcare properties, which is the core of their business model. Their approach is a classic example of using financial leverage (borrowed money) to boost potential returns on equity, but it also amplifies risk, especially in a rising interest rate environment.

Here's the quick math on their financing mix, which is crucial for any investor:

• Total Net Debt (Q3 2025): Approximately $530.1 million
• Total Shareholder Equity (Q3 2025-related): Approximately $426.8 million

The company's debt load is split between long-term obligations and a substantial draw on their revolving credit facility (a form of short-term debt). As of September 30, 2025, they had drawn $256.0 million on their revolver. This reliance on a floating-rate facility is a key risk, as rising rates directly increase interest expense, which is already a drag on their year-to-date results.

The Debt-to-Equity (D/E) ratio is the best way to map this risk. Community Healthcare Trust Incorporated's D/E ratio is currently around 124.2% (or 1.24:1). To be fair, REITs generally operate with higher leverage than traditional companies, but this figure is high even for the sector. The broader REIT industry's 'Debt Ratio' (Debt to Total Capitalization) was around 33.5% as of Q2 2025, which is a much lower proportion of debt financing. Honestly, a D/E ratio over 100% means the company is funding more of its assets with debt than with shareholder capital, making it highly leveraged.

On the refinancing front, Community Healthcare Trust Incorporated has been strategic in managing its interest rate exposure. They have interest rate swaps hedging $350.0 million of notional debt, which helps lock in a rate and mitigate the impact of rate hikes on a significant portion of their borrowings. Their weighted average interest rate on Term Loans is a moderate 4.7%, but the Revolving Line of Credit is higher at 5.4%. They have been funding recent acquisitions, like a $26.4 million inpatient rehabilitation facility in Q3 2025, using the revolver and cash, avoiding equity dilution by not issuing shares under their At-The-Market (ATM) program in the quarter. This is a smart move to avoid issuing stock at a low price, but it keeps the debt high. You can read more about the company's long-term strategy in their Mission Statement, Vision, & Core Values of Community Healthcare Trust Incorporated (CHCT).

Here is a snapshot of the core financing metrics for a clearer comparison:

The action item here is to monitor their ability to service this debt and their strategy for converting that revolver draw into permanent, long-term financing, especially as they pursue capital recycling (selling assets to fund new acquisitions) to manage their leverage.

Liquidity and Solvency

You want to know if Community Healthcare Trust Incorporated (CHCT) can meet its immediate obligations, and the short answer is yes-their liquidity position is defintely strong, which is typical for a well-managed Real Estate Investment Trust (REIT).

We look at the Current Ratio (current assets divided by current liabilities) and the Quick Ratio (acid-test ratio) to gauge this short-term health. As of the current period (near November 2025), Community Healthcare Trust Incorporated (CHCT) reports a Current Ratio of 3.40 and a Quick Ratio of 2.53. Both are well above the typical 1.0 benchmark, meaning the company has more than enough liquid assets to cover its short-term debt obligations. This is a very comfortable cushion.

Working Capital Trends

Working capital-the difference between current assets and current liabilities-is a measure of operational efficiency and short-term financial strength. Community Healthcare Trust Incorporated (CHCT) maintains a positive working capital of around $26 million. The trailing twelve months (TTM) change in working capital, as of mid-2025, was a modest increase of about $0.7 million. This small, positive change indicates stability; they are not burning through short-term resources to fund operations or growth. Good news for a REIT: stable working capital means less scrambling for cash.

Cash Flow Statements Overview

The cash flow statement is where the real story lives, showing where the money comes from and where it goes. For the trailing twelve months, Community Healthcare Trust Incorporated (CHCT) generated $56.59 million in Cash from Operations (CFO). This robust, recurring cash flow from rental income is the engine of the business.

Here's the quick math on the TTM cash flow movements, which shows a company actively investing:

• Operating Cash Flow: $56.59 million
• Investing Cash Flow: -$53.19 million
• Net Cash from Operating & Investing: ~$3.4 million surplus

The negative Cash from Investing is a positive signal, representing aggressive capital deployment into new assets, such as the Q3 2025 acquisition of a Florida inpatient rehabilitation facility for approximately $26.5 million. This means their core rental income is more than covering their significant property acquisitions.

Liquidity Concerns and Strengths

The primary strength is the sheer volume of cash generated from operations, which covers both the dividend-declared at $0.4750 per share for Q3 2025-and the majority of their investment activity. However, the company does rely on its Revolving Credit Facility for large acquisitions, with debt, net, at $530.1 million and $256 million drawn on the revolver as of September 30, 2025. This debt usage is a standard financing activity for REITs, but it bears watching in a rising interest rate environment.

A near-term liquidity watch point is the pending sale of a geriatric behavioral hospital operator, a tenant in six properties, which requires the buyer to sign new leases. While the tenant paid approximately $0.2 million in rent and interest in Q3 2025, the timing and certainty of this transaction closing remains an open question. This is a small risk to monitor, but the overall liquidity ratios suggest the company can absorb a minor delay.

For a deeper dive into who is betting on this financial health, check out Exploring Community Healthcare Trust Incorporated (CHCT) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know the bottom line on Community Healthcare Trust Incorporated (CHCT): is it a value trap or a genuine opportunity? The quick answer is that, based on key metrics and analyst models as of November 2025, the stock appears significantly undervalued despite a tough year for its share price.

The market is pricing Community Healthcare Trust Incorporated like a company facing a crisis, but the underlying fundamentals suggest otherwise. As of November 18, 2025, the stock closed at $15.26. Over the last 12 months, the price has dropped by 21.31%, and the year-to-date return is -23.56%. That's a serious decline, but it's also what creates the current valuation gap. Here's the quick math on why a deep-value investor should be paying attention.

We need to look past the sticker price and check the core valuation multiples:

• Price-to-Earnings (P/E) Ratio: The 2025 estimated P/E is 8.47. This is extremely low for a real estate investment trust (REIT), especially when compared to the broader market. A low P/E suggests the market expects little to no earnings growth, or that the stock is simply cheap.
• Price-to-Book (P/B) Ratio: The Price-to-Book value is 0.99. This means the stock is trading essentially at its book value-a rare sight. You are buying the company for less than the net value of its assets, which is defintely a sign of undervaluation.
• Enterprise Value-to-EBITDA (EV/EBITDA): The Enterprise Value (EV), which is market capitalization plus debt minus cash, stands at $947.42 million (TTM as of November 2025). One discounted cash flow (DCF) model pegs the intrinsic value at $43.00 per share, suggesting the stock is undervalued by over 195%.

This wide disparity between the stock price and the intrinsic value models is the core opportunity. The market is worried about interest rates and capital constraints, but the valuation metrics are screaming value. You can find more about the company's long-term strategy in their Mission Statement, Vision, & Core Values of Community Healthcare Trust Incorporated (CHCT).

The dividend story is just as compelling. Community Healthcare Trust Incorporated has a history of increasing its dividend every quarter since its IPO. The most recent quarterly dividend declared in October 2025 was $0.4750 per share, which translates to an annualized rate of $1.90. Based on the recent stock price, the Forward Dividend Yield is a substantial 12.84%. That's a high yield, but the payout is manageable.

Here's the breakdown of the dividend health:

The payout ratio of 84.8% against Adjusted Funds From Operations (AFFO) is healthy for a REIT. It shows the dividend is covered by the company's core cash flow, not just by accounting net income. This is a critical point: a high yield that is covered by cash flow is a sign of a cheap stock, not a distressed one.

The analyst community is aligned with the 'undervalued' thesis. The analyst consensus is a 'Buy' rating, with a 12-month price target of $18.00. That target represents an upside of about 17.96% from the recent price. So, you have the valuation multiples, the DCF models, and the analyst consensus all pointing in the same direction.

Next Step: Finance should draft a scenario analysis modeling the impact of a 15% share price appreciation (to the analyst target of $18.00) on your portfolio's total return by the end of Q1 2026.

Risk Factors

You're looking at Community Healthcare Trust Incorporated (CHCT) and seeing a solid portfolio, but every seasoned investor knows the real work is mapping the risks. The truth is, despite a conservative balance sheet, the company faces near-term execution and financial pressures that demand attention, especially in the current high-rate environment.

The core of the challenge lies in three areas: tenant-specific operational upheaval, the rising cost of debt, and a tight dividend coverage ratio that is defintely a red flag.

Operational and Tenant-Specific Headwinds

The most immediate operational risk centers on a single tenant-a geriatric behavioral hospital operator-that leases six of Community Healthcare Trust Incorporated's properties. This is a specific, high-stakes situation. To be fair, management is working to transition these leases, but any delay or complication here directly impacts rental income.

• Tenant Transition: A buyer is currently signing new leases for the six geriatric behavioral hospitals.
• Credit Loss Reserve: The company previously recorded an $8.7 million credit loss reserve in Q2 2025 related to notes receivable with this specific tenant.
• Acquisition Execution: The plan to fund the robust acquisition pipeline-about $146.0 million worth of properties under contract-relies heavily on capital recycling. If the expected sale of an inpatient rehabilitation facility, which is anticipated to yield a gain of approximately $11.5 million in Q4 2025, is delayed or falls short, the planned growth is at risk. That's a lot of eggs in one basket.

Financial Risks: Debt Cost and Dividend Coverage

The external market conditions are hitting the bottom line hard. The primary financial risk is the persistent upward pressure on interest rates. For the third quarter of 2025, Community Healthcare Trust Incorporated's interest expense climbed by approximately 13.1% compared to the previous year, largely due to higher interest rates impacting the Credit Facility. This is a direct hit to cash flow and Funds From Operations (FFO).

Here's the quick math on the dividend: for the full 2025 fiscal year, the company is forecast to pay out about $53.5 million in dividends, but the projected FFO is only around $50.9 million. This means the dividend payout ratio is forecast to be around 105%, meaning they are paying out more than they are bringing in from core operations, which is not a sustainable model for long-term dividend growth.

Mitigation Strategies and Next Steps

The good news is the company has taken steps to manage its debt structure. Their balance sheet is relatively conservative, with debt to gross real estate value ranging from 40.2% to 42.7% through Q2 2025. Plus, the debt maturity schedule is well-staggered, with no material debt maturity until March 2028, buying them time to navigate the current high-rate environment.

If you want to dive deeper into the specifics of the portfolio and valuation, you can read the full analysis at Breaking Down Community Healthcare Trust Incorporated (CHCT) Financial Health: Key Insights for Investors. Your next step should be to monitor the Q4 2025 earnings report closely to see if the planned asset sale closes on time and at the expected value, as this will be the primary driver for funding future growth and shoring up the balance sheet.

Growth Opportunities

You need to know where Community Healthcare Trust Incorporated (CHCT) is going, not just where it's been. The company's future growth isn't a gamble; it's mapped out by a disciplined, off-market acquisition strategy and a focus on essential, non-urban healthcare properties. That's a strong foundation.

For the 2025 fiscal year, the consensus revenue estimate is around $121.59 million, which sits within a tight analyst range of $120.84 million to $122.32 million. This growth is driven by property additions and consistent rental income. Earnings estimates are a bit more complex, reflecting the nature of a Real Estate Investment Trust (REIT). While the average analyst forecast for net earnings is a loss of approximately -$6.97 million, the more relevant metric, Funds From Operations (FFO) per share, is projected at $1.69 for the full year 2025. That's the real cash flow picture. Here's the quick math on the expected revenue growth:

Acquisitions and Strategic Initiatives

The core growth driver for Community Healthcare Trust Incorporated is its ability to find and close on smaller, less-contested properties. They avoid the competitive bidding wars, which keeps acquisition costs lower and returns higher. This is defintely a smart move in a high-interest environment.

• Acquisition Pipeline: The company has a robust pipeline, with six properties currently under definitive purchase agreements, representing a projected investment of approximately $146.0 million.
• 2025 Property Additions: In the first nine months of 2025 alone, Community Healthcare Trust Incorporated successfully acquired two healthcare properties for roughly $36.0 million, fully leased until 2040.
• Capital Recycling: They are also actively managing the portfolio, expecting to close on the sale of an inpatient rehab hospital in the fourth quarter of 2025 with an anticipated gain of about $11.5 million. This capital recycling funds new, accretive acquisitions.

Plus, management is working to increase occupancy, which they expect to rise by 50 to 100 basis points by year-end 2025, a direct boost to rental income.

Competitive Advantages and Market Position

Community Healthcare Trust Incorporated's competitive edge isn't about size; it's about specialization and diversification. Their exclusive focus on community healthcare properties-think medical office buildings and inpatient rehabilitation facilities-gives them a deep expertise and a strong network for sourcing deals that larger, generalist REITs miss. You can read more about their core philosophy in the Mission Statement, Vision, & Core Values of Community Healthcare Trust Incorporated (CHCT).

Their portfolio is also strategically diversified, which reduces concentration risk. No single tenant dominates, with the top two tenants accounting for just 16.3% of annualized rent. Geographically, their properties span 36 states, which insulates them from localized economic or regulatory shocks. For example, Medical Office Buildings make up 36.3% of annualized rent and Inpatient Rehabilitation Facilities account for 19.4%, showing a smart spread across different essential healthcare segments. This specialized focus, coupled with an experienced management team, positions the company well to capitalize on the aging U.S. population trend, which will keep driving healthcare expenditures higher.