Breaking Down Universal Health Realty Income Trust (UHT) Financial Health: Key Insights for Investors

You're looking at Universal Health Realty Income Trust (UHT) and wondering if the dividend is defintely safe, and honestly, the third-quarter 2025 numbers show a mixed but actionable picture, so you need to look past the headline net income of only $4.0 million. The real story for this healthcare real estate investment trust (REIT) is in its cash flow, where Funds From Operations (FFO) for the first nine months of 2025 clocked in at a solid $35.9 million, which translates to $2.59 per diluted share, but that's still a slight dip from the prior year. The good news is that the quarterly dividend of $0.74 per share is covered, but the margin is getting tighter; here's the quick math: the estimated full-year FFO per share is trending toward $3.47, meaning the payout ratio is sitting around 85%, which is high for comfort. Plus, management is moving forward with a new $34 million medical office building development in Florida, which is a great long-term move but will keep the pressure on their available credit of $67.9 million and their elevated interest expense in the near term.

Revenue Analysis

You need to know where the money is coming from and how fast it's growing, and the clear takeaway for Universal Health Realty Income Trust (UHT) is stability with modest growth, driven by long-term healthcare leases. For the first nine months of 2025, total revenue came in at approximately $74.7 million, a small but steady increase from the $74.3 million reported for the same period in 2024. That's a year-over-year (YoY) growth rate of about 0.54%, which is a tight margin but typical for a mature real estate investment trust (REIT) focused on essential services.

The primary revenue source is, unsurprisingly, rental income from the company's portfolio of 76 healthcare and human-service related facilities across 21 states. This includes acute care hospitals, medical office buildings (MOBs), and behavioral health centers. The revenue structure is split between its primary tenant, Universal Health Services, Incorporated (UHS), and a growing base of third-party tenants, which is a key area to watch for long-term diversification.

Here is a snapshot of the revenue streams from the second quarter of 2025, which totaled $24.9 million, up 0.8% from Q2 2024.

• Third-Party Lease Revenue: This is the largest segment, bringing in $14.57 million in Q2 2025.
• UHS Lease Income: Revenue from the related-party tenant, UHS, was $8.4 million in Q2 2025.
• Other Income: This includes items like interest income on financing leases, which was around $1.93 million for the quarter.

The contribution of these segments shows a deliberate, if slow, shift. While revenue from leases tied to UHS facilities made up roughly 40% of total revenue in the full year 2024, that proportion appears to be trending lower in 2025 as the company focuses on third-party growth. This diversification reduces concentration risk, which is defintely a positive move. What this estimate hides, however, is that a small increase in non-related party lease revenue and UHS bonus rent was what helped Q3 2025 revenue hit $25.302 million, beating Wall Street consensus by 1.6%.

For a clearer look at the core segments, here's the quick math on the Q2 2025 revenue split:

The analyst consensus for the full 2025 fiscal year projects total revenue to be around $102.3 million, which would represent a modest increase over the prior year. You can get a deeper dive into the valuation metrics in Breaking Down Universal Health Realty Income Trust (UHT) Financial Health: Key Insights for Investors.

Profitability Metrics

You need a clear picture of Universal Health Realty Income Trust (UHT)'s ability to turn its rental revenue into actual profit, especially with rising interest rates putting pressure on the bottom line. The short answer is that while its operational efficiency remains strong, the cost of debt is compressing the net profit you actually take home.

The company's profitability for the 2025 fiscal year, based on the nine-month results through September 30, 2025, shows a consistent, high-margin business model, but with a clear downward trend in net income. Here's the quick math, projecting a full-year revenue of approximately $99.13 million:

• Gross Profit Margin (NOI Margin): For a Real Estate Investment Trust (REIT), this is best viewed through the lens of Net Operating Income (NOI) margin, which is typically very high. UHT's operational efficiency is strong, with an estimated Operating Profit Margin (EBIT margin) for 2025 at approximately 37.4%.
• Operating Profit Margin: The estimated 2025 Operating Profit is approximately $37.07 million, yielding a margin of 37.4%. This is a solid figure, reflecting good control over property-level and general operating expenses.
• Net Profit Margin: The estimated 2025 Net Income is approximately $17.3 million, resulting in a Net Profit Margin of roughly 17.45%. This is the figure that shows the impact of interest expense and other non-operating costs.

The trend in profitability is the key concern. Universal Health Realty Income Trust's Net Income for the nine-month period ended September 30, 2025, was $13.3 million. This is down from $14.6 million in the comparable period of 2024. The primary drivers of this decline are a net decrease in property-generated income and a noticeable increase in interest expense due to higher average borrowings and rising rates.

Operational Efficiency and Industry Comparison

Universal Health Realty Income Trust's core operational efficiency, as measured by its Operating Profit Margin, is defintely a strength. The estimated 2025 Operating Margin of 37.4% is robust, particularly when compared to the broader senior housing sub-sector of Healthcare REITs, which is currently struggling to maintain a 30% margin business. This suggests UHT's portfolio-which includes medical office buildings, hospitals, and behavioral health facilities-provides a more stable and higher-margin revenue stream than pure-play senior housing operators.

However, the compression from operating profit down to net profit highlights a near-term risk. The increase in interest expense is eating into the bottom line, which is a common theme across the REIT sector in a high-rate environment. The Net Profit Margin has been trending down, dropping from 19.4% in 2024 to an estimated 17.45% in 2025. This is a critical metric to watch, as it directly impacts your dividend coverage.

Here is a quick comparison of the key profitability metrics:

The takeaway is simple: the rental business is healthy, but the capital structure is feeling the pain of higher rates. You can learn more about the shareholder base and who is driving demand in the stock by Exploring Universal Health Realty Income Trust (UHT) Investor Profile: Who's Buying and Why?

Your action: Monitor the Q4 2025 earnings release closely for any management commentary on interest expense mitigation strategies or property acquisitions that could offset the cost of capital. Finance: draft a sensitivity analysis on the 2026 dividend coverage based on a 50 basis point increase in the average borrowing rate by next month.

Debt vs. Equity Structure

You need to know how Universal Health Realty Income Trust (UHT) funds its growth, and the simple answer is: heavily through debt. The company's financial structure leans significantly on borrowed capital (leverage), which is a calculated risk that boosts potential returns but also amplifies interest-rate exposure.

The core takeaway is that Universal Health Realty Income Trust's debt-to-equity ratio sits at a high 2.33 as of the third quarter of 2025. This is substantially higher than the typical healthcare Real Estate Investment Trust (REIT) industry median, which hovers closer to 0.79. To put that in perspective, for every dollar of shareholder equity on the balance sheet, the company has taken on over two dollars in debt. This is defintely a high-leverage model.

Here's the quick math on their Q3 2025 position:

• Total Shareholder Equity: $158.6 million
• Primary Borrowings (Under Credit Facility): $357.1 million
• Reported Debt-to-Equity Ratio: 2.33

The vast majority of Universal Health Realty Income Trust's debt is long-term, structured primarily through a revolving credit agreement. This is how the company balances its financing needs-using a flexible credit line for property acquisitions and development, rather than relying on frequent, costly equity issuances.

To be fair, the company has been proactive in managing this debt structure. Universal Health Realty Income Trust successfully extended the maturity date of its $425 million credit agreement to September 30, 2028. This move provides crucial near-term stability and liquidity. As of the end of Q3 2025, the company had drawn $357.1 million on that facility, leaving $67.9 million in available borrowing capacity to fund new projects, such as the planned $34 million medical office building in Palm Beach Gardens.

What this high leverage estimate hides is the ongoing cost of capital. Interest expense remains a significant headwind, increasing due to higher average borrowings and rising interest rates throughout 2025. This directly pressures net income, a trend you can explore further in our detailed analysis: Breaking Down Universal Health Realty Income Trust (UHT) Financial Health: Key Insights for Investors.

The debt-to-equity ratio is high, but the refinancing activity shows management is focused on extending the runway. Still, investors must monitor the interest coverage ratio, as high leverage in a rising-rate environment makes earnings volatile.

Debt and Equity Snapshot (Q3 2025)

Liquidity and Solvency

Universal Health Realty Income Trust (UHT) shows an exceptionally strong near-term liquidity position, which is a significant plus for a real estate investment trust (REIT). The key takeaway is that the company has ample cash and near-cash assets to cover its short-term debts, minimizing immediate operational risk.

For the period ending in November 2025, Universal Health Realty Income Trust's Current Ratio sits at a remarkable 10.27. This means for every dollar of current liabilities (debt due within one year), the company holds over ten dollars in current assets. The Quick Ratio is identical at 10.27, which is typical for a REIT, as they carry little to no inventory. Honestly, a ratio this high, while defintely a sign of safety, also suggests that the company is holding a significant amount of cash or equivalents, which might be deployed more aggressively for growth, but still, it's a fortress balance sheet.

Working Capital and Cash Flow Trends

The high current ratio translates directly into a robust working capital position. Based on the fiscal year-end 2024 figures, Universal Health Realty Income Trust had Current Assets of $89.89 million and Current Liabilities of $11.14 million. This resulted in a working capital of about $78.75 million. Given the 2025 ratio of 10.27, this positive trend has continued and likely increased, indicating a large buffer of resources available for operations, a key strength in a fluctuating interest rate environment.

Looking at the trailing twelve months (TTM) cash flow, which gives us a clearer picture of operational health leading up to late 2025, the trends are solid:

• Operating Cash Flow (CFO): Universal Health Realty Income Trust generated $48.65 million in cash from its core rental and property operations. This is the lifeblood of a REIT.
• Investing Cash Flow (CFI): The company had a net outflow of -$15.15 million. This negative number is actually a positive signal, as it shows the company is actively spending on property acquisitions or capital improvements, investing in its future asset base.
• Financing Cash Flow (CFF): While not a single number, the financing activity is focused on managing debt and paying dividends. The TTM Levered Free Cash Flow was $40.34 million, which comfortably covers the declared quarterly dividend of $0.735 per share (which totaled $10.2 million in Q1 2025).

Liquidity Strengths and Risks

The primary liquidity strength is the sheer size of the current assets relative to liabilities, plus the reliable cash flow from operations, which is backed by long-term leases and high occupancy. This provides significant Exploring Universal Health Realty Income Trust (UHT) Investor Profile: Who's Buying and Why? financial resilience. Furthermore, the company has substantial unused capacity on its credit facility. As of March 31, 2025, Universal Health Realty Income Trust had $75.5 million of available borrowing capacity under its $425 million credit agreement.

Here's the quick math on the available liquidity:

What this estimate hides is the risk of tenant concentration, primarily with Universal Health Services (UHS). If UHS were to face financial difficulty, it could quickly impact the cash flow visibility, despite the current ample liquidity. Still, the conservative leverage and active interest-rate hedging reinforce their financial resilience.

Valuation Analysis

You want to know if Universal Health Realty Income Trust (UHT) is overvalued or undervalued right now, and the quick answer is that its valuation metrics suggest it's trading at a premium compared to the broader market, but the strong dividend yield complicates that picture. The stock closed at $40.49 on November 21, 2025, after a solid recent run-up of 10.19% over the last month, even though it's still down 1.44% over the last 12 months.

When we look at traditional metrics, Universal Health Realty Income Trust appears expensive. Its trailing Price-to-Earnings (P/E) ratio is approximately 30.54, which is high for a Real Estate Investment Trust (REIT) and significantly above the S&P 500 average. The Price-to-Book (P/B) ratio sits at 2.86, indicating the market is valuing the company's assets-mostly healthcare facilities-at nearly three times their book value. This suggests investors are pricing in substantial future growth or the stability of its healthcare-focused portfolio.

Here's the quick math on its enterprise value: the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is 11.80. This is a more relevant metric for a capital-intensive business like a REIT, and while not excessively high, it still points to a fully valued stock. What this estimate hides is the long-term, stable nature of its leases, which are the core of its business model. For a deeper dive into that stability, you should review the Mission Statement, Vision, & Core Values of Universal Health Realty Income Trust (UHT).

The biggest draw, and the reason for the premium valuation, is the income stream. Universal Health Realty Income Trust offers a compelling dividend, with a forward annual payout of $2.96 per share, translating to a current dividend yield of around 7.30%. That's a powerful incentive in a low-yield environment.

Still, you have to be mindful of the payout ratios. The dividend payout ratio based on trailing earnings is a very high 229.46%, meaning the company is paying out more than its net income. However, for a REIT, it's more accurate to look at cash flow coverage; the payout ratio based on cash flow is a more sustainable 77.85%.

• Stock is trading near its 52-week high of $42.82.
• P/E ratio of 30.54 signals a premium valuation.
• Cash flow covers the high 7.30% dividend yield.

Analyst consensus reflects this mixed bag. Wall Street equities research analysts currently have a consensus rating of Hold for Universal Health Realty Income Trust shares. This 'Hold' rating suggests that while the stock isn't cheap enough to be a clear 'Buy' based on valuation, the stable income and high yield make it a decent holding for existing investors. One short-term technical analysis system did recently upgrade the stock to a 'Buy Candidate,' but the broader analyst community is still cautious.

Risk Factors

You're looking at Universal Health Realty Income Trust (UHT) for its stable dividend history, but honestly, the near-term landscape has some clear headwinds you need to map out. The biggest risk is not a secret: it's the heavy concentration of revenue tied to a single tenant, Universal Health Services, Inc. (UHS). This isn't just a minor issue; it's a structural vulnerability.

For the nine months ended September 30, 2025, revenue from facilities leased to UHS made up about 24% of UHT's total revenue. To be fair, UHS is a financially strong operator, but any major disruption to their business-a non-renewal of a significant lease or a decision to buy the properties-would hit UHT's income hard. This concentration risk is why you need to keep a close eye on the financial health of the tenant, not just the landlord. It's one point of failure. You can review the strategic overview here: Mission Statement, Vision, & Core Values of Universal Health Realty Income Trust (UHT).

The external risks are also material, especially the regulatory and macroeconomic shifts. The healthcare industry is always a moving target, and legislative changes can quickly impact your tenants' ability to pay rent. Plus, the overall growth picture is sluggish.

• Regulatory Impact: The 'One Big Beautiful Bill Act,' passed in July 2025, could reduce Medicaid revenue for UHT's tenants, increasing their uncompensated care costs.
• Macro Headwinds: Tenants are battling rising wage expenses from healthcare staffing shortages and increased construction material costs, which squeeze their operating margins.
• Growth Slowdown: UHT's revenue is projected to grow at a meager 0.8% per year, dramatically trailing the broader US market average.

On the financial side, the interest rate environment is still a factor. We've seen the downside already: Q1 2025 Funds From Operations (FFO) was $0.86 per diluted share, a dip from the prior year, partly due to higher interest expense. The delayed Federal Reserve rate cuts mean the anticipated boost to FFO is pushed into 2026, which is why the revised 2025 FFO outlook is now lower, projected between $3.45 and $3.55 per share. Here's the quick math on the 2025 year-to-date performance, which shows the pressure:

What this estimate hides is UHT's proactive mitigation. The company is managing its interest rate exposure using swaps, like one for $85 million at a fixed rate of 3.2725%. Also, their leverage is conservative; total leverage was around 44% as of September 30, 2025, well within their 60% limit. They also extended their credit agreement maturity to September 2028 and increased borrowing capacity to $425 million, giving them a solid liquidity cushion of $75.5 million in available capacity as of March 31, 2025. They are managing the balance sheet well, but the concentration and external regulatory risks remain the key operational challenges.

Growth Opportunities

You're looking for where Universal Health Realty Income Trust (UHT) can actually move the needle, and honestly, the growth story here is less about explosive expansion and more about rock-solid, predictable income. The direct takeaway is that UHT's future is anchored in demographic tailwinds and contractual rent increases, not aggressive acquisitions, leading to low-single-digit growth.

The primary growth driver is simply the aging US population. As the massive Baby Boomer generation requires more care, demand for UHT's core portfolio-acute care hospitals, medical office buildings, and behavioral health facilities-is set to grow. This demographic shift is a slow-motion tsunami that healthcare real estate investment trusts (REITs) like UHT are perfectly positioned to capitalize on. They don't need to invent a new product; they just need to own the buildings.

Growth will come from two main areas: rising rents on existing properties and strategic, measured acquisitions. Most of their leases include rent escalators (increases) that are typically in the 2% to 5% range annually. That's a steady, inflation-linked kicker to the top line. Plus, the trust has been proactive in managing its balance sheet, increasing its borrowing capacity to $425 million and extending the maturity date to September 30, 2028, which gives them flexibility for new property buys.

Here's a quick look at the near-term financial picture for 2025, which shows the current headwinds: growth is tepid.

• Revenue Growth: Projected to grow at just 0.8% per year, which is defintely slow compared to the US market average of 10.1%.
• 2025 FFO Estimate: Analysts project Funds From Operations (FFO) per share to land between $3.45 and $3.55 for the full year.
• 9-Month FFO: As of September 30, 2025, FFO was $2.59 per diluted share on $35.9 million in total FFO, showing the path to that full-year estimate.

What this estimate hides is the persistent pressure from higher interest expenses, which has been a headwind in 2025. For example, Q2 2025 FFO was $0.85 per diluted share, down from the prior year, largely due to those increased borrowing costs. The good news is that the full benefit of potential Federal Reserve rate cuts is expected to really start boosting FFO in 2026, not 2025.

UHT's competitive edge isn't a proprietary technology; it's stability and a strong relationship with its largest tenant. To be fair, as a smaller-cap trust, UHT doesn't have the scale of its larger healthcare REIT peers. However, its competitive advantage lies in its reliable, predictable cash flow, which is supported by long-term leases and high occupancy. This stability is what allows the Board to keep raising the dividend, including the June 2025 increase to $0.74 per share. That's a clear action showing management's confidence in distributable cash flow. Still, you must watch the concentration risk: roughly 40% of UHT's revenue comes from Universal Health Services, Inc. (UHS). You can read more about this in the full post: Breaking Down Universal Health Realty Income Trust (UHT) Financial Health: Key Insights for Investors.

Here's the quick math on the first half of 2025 revenues, which shows how stable the rental engine is:

The revenue is steady, but the earnings per share (EPS) compression is a clear sign that higher interest rates are eating into the bottom line. The growth is there, but it's a grind.