Universal Health Realty Income Trust (UHT) risk factors, FY2024 10-K

Other

1. 01The revenues and results of operations of the operators of our hospital facilities, including UHS, and our medical office buildings, are significantly affected by payments received from the government and other third-party payers
2. 02Reductions or changes in Medicare and Medicaid funding could have a material adverse effect on the future operating results of the operators of our facilities, including UHS, which could, in turn, materially reduce our revenues and net income
3. 03The uncertainties of health care reform could materially affect the business and future results of operations of the operators of our facilities, including UHS, which could, in turn, materially reduce our revenues and net income
4. 04The trend toward value-based purchasing may negatively impact the revenues of our hospital operators
5. 05Operators that fail to comply with governmental reimbursement programs such as Medicare or Medicaid, licensing and certification requirements, fraud and abuse regulations or new legislative developments may be unable to meet their obligations to us
6. 06U.S. federal tax reform legislation now and in the future could affect REITs, both positively and negatively, in ways that are difficult to anticipate
7. 07UHS and its subsidiaries are subject to pending legal actions, purported stockholder class actions, governmental investigations and regulatory actions
8. 08Required regulatory approvals can delay or prohibit transfers of our healthcare facilities
9. 09Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance (“ESG”) matters, that could expose us to numerous risks

Risks Related to Business Operations

1. 10Increased competition in the health care industry has resulted in lower revenues and higher costs for our operators, including UHS, and may affect our revenues, property values and lease renewal terms
2. 11A substantial portion of our revenues are dependent upon one operator. If UHS experiences financial difficulties, or otherwise fails to make payments to us, or elects not to renew the leases on our three acute care hospitals, our revenues could be materially reduced
3. 12Our relationship with UHS may create conflicts of interest
4. 13We hold non-controlling equity ownership interests in various joint-ventures
5. 14The bankruptcy, default, insolvency or financial deterioration of our tenants could significantly delay our ability to collect unpaid rents or require us to find new operators
6. 15Real estate ownership creates risks and liabilities that may result in unanticipated losses or expenses
7. 16defaults and bankruptcies by our tenants
8. 17Changes to U.S. and other countries’ trade policies and other factors beyond our control may adversely impact our business and operating results
9. 18If we fail to maintain our REIT status, we will become subject to federal income tax on our taxable income at regular corporate rates
10. 19Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow
11. 20Dividends paid by REITs generally do not qualify for reduced tax rates
12. 21Should we be unable to comply with the strict income distribution requirements applicable to REITs utilizing only cash generated by operating activities, we would be required to generate cash from other sources which could adversely affect our financial condition
13. 22Complying with REIT requirements may cause us to forego otherwise attractive opportunities
14. 23Significant potential liabilities and rising insurance costs and availability may have an adverse effect on the operations of our operators, which may negatively impact their ability to meet their obligations to us
15. 24We depend heavily on key management personnel and the departure of one or more of our key executives or a significant portion of our operators’ local hospital management personnel could harm our business
16. 25Increasing investor interest in our sector and consolidation at the operator or REIT level could increase competition and reduce our profitability
17. 26We may be required to incur substantial renovation costs to make certain of our healthcare properties suitable for other operators and tenants
18. 27A cyber security incident could cause a violation of HIPAA, breach of member privacy, or other negative impacts

Risks Related to the Market Conditions and Liquidity

1. 28Continuing inflationary pressures and a worsening of the economic and employment conditions in the United States could materially affect our business and future results of operations of the operators of our facilities which could, in turn, materially reduce our revenues and net income
2. 29The deterioration of credit and capital markets may adversely affect our access to sources of funding and we cannot be certain of the availability and terms of capital to fund the growth of our business when needed
3. 30We continue to see rising costs in construction materials and labor. Such increased costs could have an adverse effect on the cash flow return on investment relating to our capital projects
4. 31Catastrophic weather and other natural events, whether caused by climate change or otherwise, could result in damage to our properties

Risks Related to Our Securities

1. 32The market value of our common stock could be substantially affected by various factors
2. 33When interest rates increase, our common stock may decline in price