Diversified Healthcare Trust (Nasdaq: DHC) Reports Robust Fourth Quarter 2025 Results, Announces Positive 2026 Guidance

Key Financial and Strategic Highlights

• Q4 2025 Same Property SHOP NOI surges 27.6% year-over-year to \$38.3 million.
• Full-year 2025 SHOP NOI jumps 31.3% to \$139.3 million.
• SHOP occupancy reaches 82.4%, up 90bps over prior year; average monthly rates increase 5.8%.
• Medical Office and Life Science segment ends year with 94.7% same property occupancy.
• Net loss narrows to \$21.2 million, or \$0.09 per share, in Q4 2025.
• Normalized FFO: \$21.8 million (\$0.09 per share); Adjusted EBITDAre: \$72.4 million.
• Successful wind-down of AlerisLife and transition of 116 communities to seven new operators completed.
• Redemption of all outstanding zero-coupon senior secured notes due 2026, funded by sale of 35 properties and cash on hand.
• Full-year 2026 guidance provided on company’s investor relations website.

Detailed Financial Review

Diversified Healthcare Trust (DHC) reported impressive operational and financial performance for the fourth quarter and full year 2025, showing strong momentum as it heads into 2026.

SHOP (Seniors Housing Operating Portfolio) Segment:

• Fourth quarter same property SHOP Net Operating Income (NOI) soared 27.6% to \$38.3 million, compared to Q4 2024.
• Full-year 2025 SHOP NOI grew 31.3% to \$139.3 million.
• Same property SHOP occupancy rose to 82.4%, up 90 basis points year-over-year.
• Average monthly rates increased 5.8%, driving a 25.6% increase in same property SHOP revenues.

Medical Office and Life Science Portfolio:

• Same property occupancy stands at 94.7% as of Q4 2025, up from 94.6% in Q3 2025 and 94.6% in Q4 2024.
• Leased 81,055 square feet during the quarter at weighted average rents 7.9% higher than prior leases for the same space.

Financial Performance:

• Q4 2025 net loss narrowed to \$21.2 million (or \$0.09/share) from much higher losses in previous quarters.
• Normalized Funds From Operations (FFO) increased to \$21.8 million (\$0.09/share).
• Adjusted EBITDAre improved to \$72.4 million, indicating stronger operational profitability.
• Annualized dividend declared per common share maintained at \$0.04, with a normalized FFO payout ratio of 11.1%.
• Balance sheet remains robust with total assets of \$4.36 billion and total equity of \$1.67 billion as of December 31, 2025.

Liquidity & Capital Management

• DHC fully redeemed the remaining balance of its zero-coupon senior secured notes due 2026, reducing debt and strengthening the balance sheet. The redemption was financed through dispositions of 35 properties (generating \$604.9 million in gross proceeds) and cash on hand.
• As of December 31, 2025, DHC had \$105.4 million in cash and cash equivalents, and no outstanding balance on its secured revolving credit facility.
• Net debt to total gross assets improved to 36.3% from 40.2% a year earlier, highlighting disciplined leverage reduction.
• Maintenance and incurrence covenants under bond agreements are all comfortably met, with significant headroom (e.g., total unencumbered assets/unsecured debt at 256.1% vs. required 150%).

Strategic & Operational Developments

• SHOP Community Transition: The company completed the transition of 116 communities to seven different operators, finalizing the wind-down of AlerisLife operations. This move is expected to drive long-term stability and improved performance in the SHOP segment.
• Capital Expenditures: DHC invested a total of \$190.5 million in capital expenditures in 2025, including \$139.6 million in SHOP properties, \$30.3 million in Medical Office and Life Science, and \$20.6 million in Wellness Centers, reflecting ongoing commitment to portfolio upgrades and repositioning.
• Redevelopment and Dispositions: DHC disposed of 69 properties in 2025, generating \$604.9 million in gross proceeds, and reinvested in selective redevelopment activities. Notable transactions and continued pruning of the portfolio are intended to unlock shareholder value and sharpen asset focus.

2026 Guidance

DHC provided full-year 2026 guidance, which is accessible on its investor relations website. While specific numbers are not outlined in the release, the company’s management expressed confidence in carrying “significant positive momentum into 2026,” referencing continued improvement in the SHOP segment and stable portfolio performance.

Shareholder/Investor Considerations & Potential Price-Sensitive Developments

• SHOP Segment Recovery: The sharp rebound in SHOP NOI and occupancy, coupled with higher rates, signals a turnaround in a segment that was previously under significant pressure. This is likely to be viewed as a positive catalyst for the share price.
• Successful Debt Reduction: The complete redemption of high-cost debt instruments, funded by asset sales, significantly de-levers the balance sheet. This reduces refinancing risk and interest expense, which may have a favorable impact on valuation multiples and investor confidence.
• Transition from AlerisLife: The completed operator transition removes a prior overhang and operational uncertainty. Improved stability in SHOP operations may drive further investor interest.
• Dividend Sustainability: The company maintained its dividend, supported by improved FFO and a conservative payout ratio, enhancing its appeal to income-oriented investors.
• Guidance and Forward-Looking Statements: Management’s optimistic tone regarding 2026, if realized, could fuel additional share price appreciation.

Upcoming Events

DHC will host a conference call to discuss these results on Tuesday, February 24, 2026, at 10:00 a.m. Eastern Time. Details for accessing the call and webcast are available on the company’s website.

Conclusion

Diversified Healthcare Trust’s Q4 2025 report demonstrates a meaningful operational turnaround, particularly in the SHOP segment, alongside disciplined capital management and a clear strategic focus. The company enters 2026 with reduced leverage, a higher-quality portfolio, and a confident outlook. These developments are material and could drive share price movement as investors reassess the risk/reward profile of DHC.

Disclaimer: This article is based on the company’s SEC filings and summary press releases as of February 23, 2026. It is for informational purposes only and does not constitute investment advice. Investors should review the full filings and consult a financial advisor prior to making investment decisions. Forward-looking statements are subject to risks and uncertainties which may cause actual results to differ materially from those expressed herein.

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