Nursing Homes Outshine Hospitals as Healthcare Investment
The article mentions two stocks: CareTrust REIT (CTRE) and Medical Properties Trust (MPW). The author's recommendation is to be cautious with MPW and consider CTRE instead.
The author's core argument is that hospital operators, represented by MPW, face ongoing financial difficulties due to lower revenue growth from outsourced services and rising expenses. In contrast, senior care facilities, represented by CTRE, are experiencing positive trends in occupancy, revenue, and staffing.
Key information and data provided in the article include:
- MPW's large debt load and coming debt maturities, which have led to the selling of assets to pay down debt.
- Lower revenue growth and rising expenses for hospital operators.
- CTRE's SNF operators experiencing positive trends and a focus on high-quality operators.
- CTRE's massive outperformance over MPW since the beginning of 2015.
- Persistent challenges for hospital operators, including falling reimbursement rates, rising labor costs, and other expense increases.
- Financial difficulties and poor quality ratings for hospitals operated by PE-backed tenants like Prospect Medical.
- CTRE's better lease coverage, higher rent collection rates, and focus on best-in-class operators.
- MPW's shrinking portfolio, higher debt load, and unfavorable debt maturity schedule.
- Industry tailwinds for SNF operators and headwinds for hospital operators.
Overall, the author suggests that CTRE is a better investment option than MPW due to the ongoing challenges faced by hospital operators and the positive trends in the senior care industry.
