HCP Shares Fall on Unexpected Loss, Weak Outlook

By Tess Stynes 

HCP Inc. swung to an unexpected fourth-quarter loss on a write-down related to HCR ManorCare, which turned in a weaker-than-anticipated performance amid continuing challenges in the skilled-nursing sector.

The real-estate investment trust's shares, down 34% in the past 12 months, fell 15% to $28.93 in midday New York trading as HCP's 2016 profit guidance missed expectations.

For the year, HCP projected per-share earnings of $1.49 to $1.55, while analysts polled by Thomson Reuters expected $1.90.

HCP's invests in real estate in the senior-housing, skilled-nursing, life-sciences, medical-office and hospital sectors of the health-care industry.

The Irvine, Calif., company's outlook reflects reduced expectations for HCR ManorCare, as the skilled-nursing sector faces challenges related to the shift in patients from the traditional fee-for-service model to managed care, as well as shorter lengths of patient stays.

HCR ManorCare is in the process of shedding 50 nonstrategic assets and completed sales of 21 of those assets during the quarter.

Over all, HCP reported a loss of $598.9 million, or $1.29 a share, compared with a year-earlier profit of $196.6 million, or 43 cents a share. The latest period includes net asset write-downs of $810.9 million.

Funds from operations, excluding certain items--a key measure of performance for REITs--rose to 80 cents a share from 79 cents a share.

Total revenue increased 11% to $668 million, including rental and related revenue growth of 6.9% to $299.1 million. Resident fees and services revenue climbed 53% to $158.3 million.

Analysts polled by Thomson Reuters expected per-share profit of 25 cents and revenue of $614.28 million.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

February 09, 2016 12:41 ET (17:41 GMT)

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