Medical Properties Trust, Inc. (NYSE:MPW) Q4 2022 Earnings Call Transcript

Steven Hamner: Well, we don’t have anything to report on Australia. But other than to address your question, we continue to see strong appetite across the geographies, and that’s indicated by unsolicited occasional but fairly frequent inquiries about our assets across Western Europe. And although we’ve never acknowledged the Australian sale process, we don’t deny it, but we have nothing to report on that at this time.

Vikram Malhotra: Okay. Thank you.

Operator: Our next question comes from Steven Valiquette from Barclays. Please go ahead with your question.

Steven Valiquette: Great. Thanks. Good morning. Thanks for taking the question. And also, I appreciate the extra color on Prospect Medical, maybe just to provide some additional updated color around their underlying operations within the Pennsylvania hospitals. Just remind us what the key variables are to improve the profitability of the operations. And I recall there was some conjecture to potentially repurpose some of those PA assets into alternative use, I believe, on the behavioral side, but that may have hit some road blocks. I’m just curious if you can just give us an update on these collective dynamics and just path to improvement for these Pennsylvania hospitals just based on what you know right now. Thanks.

Edward Aldag: Sure Steve. As we’ve all talked about previously, that particular area was hit harder with COVID than a lot of other areas in the United States, and that’s not just from a patient standpoint, but probably worse from a staffing standpoint, the rules that we all used to have to go by, if you tested positive COVID if you even tested for COVID, most hospitals don’t even test for COVID anymore. So most of those issues have been resolved. But you’re right, when they originally bought these facilities, they had a plan, which we knew about and in light of repurposing a number of the facilities. The problem is you’ve got facilities there that are very close to each other that are providing the same services and we think they had a very good plan for repositioning what services were provided in each individual facility.

What I guess none of us took into account was the political fallout that would cause various politicians saying, well, I’m not — don’t take my hospital the way those types of things. That’s been much harder than any of us realized. I think that as Prospect has gone through this, the politicians have been much easier to work with as of late. So, we have — we do have hope that they can do what their original plan was and repurposing some of those facilities. I don’t want to make a plan based on the last month and — two months and a half. But their operating statistics all look dramatically better than they did this time last year. And so they’re clearly making some progress, but two and a half months don’t make a real plan at this point.

Steven Valiquette: Okay, all right. Appreciate that color. Thanks.

Operator: Our next question comes from Michael Carroll from RBC Capital Markets. Please go ahead with your question.

Michael Carroll: Thanks. I wanted to stay on Prospect. And I guess, Steve, you made some comments that provided prospects with some potential over rent options. I mean what do those options include? And had they made a decision on what they wanted to do with those options?

Steven Hamner: No, I think just to be clear, we’re considering that, and we expect that we will provide some fairly significant rent options, rent deferral options. Again, going back to Ed’s opening comments about Prospect, it’s going to be at least a 12 to 18-month process. And that’s the reason, for example, we gave the worst-case scenario. As if during 2023, we collect nothing from Prospect. That’s what gets you to the $1.50. So that truly is a worst-case scenario. We do expect to provide Prospect some alternatives to manage its cash flow across the quarters, but we have not finalized that yet. And just because we are presenting a worst-case scenario of collecting no rent, that’s not necessarily to imply that that’s what we intend to offer Prospect.