The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial statements. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation. Interim results of operations are not necessarily indicative of the results that may be achieved for a full year. The condensed consolidated financial statements and related notes do not include all information and notes required by GAAP for annual reports. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”).

Our condensed consolidated financial statements include the accounts of NHI and our wholly owned subsidiaries, joint ventures and variable interest entities (“VIE”) which we control through voting rights or other means. All intercompany transactions and balances are eliminated in consolidation. Reference Note 16 for additional information on our consolidated VIEs and unconsolidated VIEs.

We use the equity method of accounting when we own an interest in an entity over which we can exert significant influence but cannot control the entity’s operations. We discontinue the equity method of accounting if our investment in an entity, including our net advances to the entity, is reduced to zero, except in those instances in which we have guaranteed the obligations of the entity or are otherwise committed to provide further financial support to the entity. Reference Note 6 for additional information on our equity method investment.

The following table provides a reconciliation of cash, cash equivalents and restricted cash from our condensed consolidated statements of cash flows to the amounts presented on our condensed consolidated balance sheets ($ in thousands):


	Nine Months Ended
	September 30,
	2025		2024
Balances at the beginning of the period:
Cash and cash equivalents	$	24,289	$	22,347
Restricted cash1	2,213		2,270
Total cash, cash equivalents and restricted cash	$	26,502	$	24,617
Balances at the end of the period:
Cash and cash equivalents	$	81,625	$	15,550
Restricted cash1	—		2,217
Total cash, cash equivalents and restricted cash	$	81,625	$	17,767

We have credit risks related to our tenants, borrowers and managers. Our portfolio, which is comprised of real estate properties and mortgage and other notes receivable, subjects us to the possibility of losses that may result from the failure of other parties to perform according to their contractual obligations with us or may result from a decline in market prices which may make our investments less valuable. Our mortgages and other notes primarily consist of secured loans on healthcare facilities. We require collateral and other protective rights from our borrowers that we continually monitor to reduce our potential risks of incurring losses on these investments. Our management performs periodic reviews of our investments on an individual basis to assess for necessary reserves for potential losses.

We also have credit risks related to our cash and cash equivalents, which are primarily held in bank accounts and overnight investments. We maintain our bank deposit accounts with large financial institutions in amounts that may exceed federally insured limits. We have not experienced any losses in these accounts.

We evaluate the recoverability of the carrying values of our long-lived assets when events or circumstances indicate that the carrying amounts may not be recoverable. We assess whether an impairment charge is needed by comparing the future estimated undiscounted cash flows of the identified asset to its carrying amount. If recognition of an impairment charge is necessary, it is measured as the amount by which the carrying value of the identified asset exceeds its estimated fair value. Impairment charges are included in loan and realty (gains) losses, net, in our condensed consolidated statements of income.

If a real estate property meets the criteria to be classified as an asset held for sale in accordance with GAAP, we measure the amount by which the carrying value exceeds the estimated fair value less cost to sell. We estimate the fair value of a property using a market approach that takes into consideration any recent binding agreements for sales of similar properties and any recent purchase offers we have received for the property, when available, and estimates of the fair value based on broker quotes and third-party valuations.

•Level 2 utilizes observable inputs, other than quoted prices described in Level 1 of the hierarchy, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active and other inputs that are observable or can be corroborated by observable market data.

•Level 3 utilizes unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities including, but not limited to, pricing models, discounted cash flow methodologies and other similar techniques.

We assess our arrangements with noncontrolling interest holders to determine the appropriate balance sheet classification based on the redemption rights and other rights held by the noncontrolling interest holder. Contingently redeemable noncontrolling interests are initially recognized at the greater of the initial carrying value or the redemption value and subsequently adjusted to reflect contributions and distributions of the noncontrolling interest and its share of the partnership’s net income or loss for each period. In the period in which the contingencies for redemption of the noncontrolling interest’s shares are met or become probable of being met at a future date, we accrete the carrying value to the redemption value over the period until expected redemption through an offsetting adjustment to capital in excess of par value.

We generate rental income from the properties in our Real Estate Investments segment pursuant to operating leases between us and the tenants who operate these properties. These leases are typically triple-net leases with fixed annual escalators. We recognize the contractual amount of base rental income from a tenant lease using the straight-line method over the initial term of the lease, subject to a collectability assessment. Certain of our leases provide for additional contingent rent based on a percentage of the tenant’s revenue in excess of a specified annual or quarterly base amount or other threshold as defined in the lease agreement. We recognize contingent rent as income when the actual results reported by the tenant have exceeded the applicable base amount or threshold. Our schedule of future minimum lease payments due to us on tenant leases excludes any provisions for contingent rent.

At lease inception, we may make certain payments to our tenants that are treated as lease incentives. These amounts are amortized over the respective lease term and recognized as a reduction of rental income in our condensed consolidated statements of income. Lease incentives are included in other assets, net, on our condensed consolidated balance sheets.

We assess the collectability of our accounts receivable related to tenant leases on a regular basis taking into account factors such as a change in the tenant’s payment history, the current financial condition of the tenant, other new business or market conditions that may affect the tenant’s operations and changes in economic conditions in the geographical areas where the tenant operates. In the event that we determine the future collectability of substantially all lease payments of a tenant are no longer probable, we write off the related accounts receivable and straight-line rents receivable in the period in which this determination becomes known as a reduction of rental income and begin recognizing rental income from the applicable tenant on a cash basis. Any recoveries of previously written-off accounts receivable are recognized as rental income in the period payment is received. Reference the “Cash Basis Tenants” section in Note 3.

We generate resident fees and services income from the senior housing communities in our SHOP segment pursuant to independent agreements for each residential unit at these communities. These revenues include resident room and care charges, community fees and other charges for optional services available to the residents.

Residency agreements generally have terms of 30 days to one year and are cancelable by the resident with 30 days’ notice. We typically bill residents a fixed monthly fee at the beginning of each month for room fees, community fees and general care services. Certain of the more individualized need-based and optional services are billed to residents monthly in arrears. We have elected the lessor practical expedient within Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”), which permits us to combine the lease and non-lease components within our residency agreements as the timing and pattern of transfer of the underlying services to the resident are the same. We have determined that the non-lease component is the predominant component within these contracts in accordance with ASC 842 and therefore recognize the revenues from these contracts under ASC 606, Revenue Recognition from Contracts with Customers (“ASC 606”).

Interest income is recognized as earned based on the interest rates and principal amounts outstanding on our mortgage and other notes receivable. Accrued interest on mortgage and other notes receivable is included in other assets, net, on our condensed consolidated balance sheets. We assess the collectability of our mortgages and other notes on a regular basis taking into consideration criteria such as the borrower’s timeliness of required payments, the borrower’s current financial condition and the borrower’s compliance with other covenants and provisions of the loan agreement. If we conclude that a loan has become non-performing, we place it on non-accrual status in the period in which it becomes known and probable that the borrower cannot pay the contractual amounts due to us. A non-performing loan is returned to accrual status if the borrower becomes contractually current on payments and management believes all future principal and interest will be received from the tenant in accordance with the terms of the loan agreement. Reference the “Non-Performing Notes” section in Note 4.

We measure and recognize share-based compensation expense upon issuing stock incentive awards based on the grant date fair value of the award which is amortized over the requisite service period in accordance with the terms of each agreement. The fair values of stock options are estimated on the respective grant dates using the Black-Scholes option pricing model. The fair values of restricted stock awards are determined based on the closing market price of our common stock on the individual dates of grant. Forfeitures of stock incentive awards are recognized as a reduction to share-based compensation expense in the periods in which they occur. Share-based compensation expense is recognized in general and administrative expenses in our condensed consolidated statements of income.

We intend at all times to qualify as a REIT under Internal Revenue Code Sections 856 through 860. Accordingly, we will generally not be subject to U.S. federal income taxes provided that we continue to qualify as a REIT. A failure to qualify with the applicable REIT rules and regulations would have a material adverse impact on our consolidated financial position, results of operations and cash flows.

Certain activities that we undertake may be conducted by subsidiary entities that have elected to be treated as taxable REIT subsidiaries (“TRS”). TRSs are subject to federal, state, and local income taxes. Accordingly, a provision for income taxes is made in our condensed consolidated financial statements, when applicable.

The One Big Beautiful Bill Act, which passed on July 4, 2025, contains legislation increasing the percentage limit under the REIT asset test applicable to TRSs from 20% to 25%. This change applies to taxable years beginning after December 31, 2025.

We operate our business through two reportable segments, Real Estate Investments and SHOP. In our Real Estate Investments segment, we invest in (i) senior housing and medical facility properties that we lease to tenants primarily under triple-net leases that obligate the tenant to pay all of the property operating expenses and (ii) mortgages and other notes in which we finance construction, renovation and expansion projects, funding of working capital or corporate needs and the acquisition of real estate properties for our tenants, operators and other third parties. In our SHOP segment, we invest in senior housing communities that are operated on behalf of us by third-party managers pursuant to the terms of the respective management agreements. Reference Note 5 for additional information on our SHOP operations.

We may transfer a real estate property or group of real estate properties from one segment to the other based on our intended future use of the respective properties. The operating results of a transferred property are included in the predecessor segment operating results prior to the effective date of the transfer and in the operating results of the successor segment from the effective date of the transfer to the end of the reporting period. Reference the “Discovery Transitions” section in Note 3 for additional information on our real estate property transitions.

We have, and may continue to, enter into forward equity sales agreements relating to shares of our common stock, either through our at-the-market (“ATM”) equity program or through underwritten public offerings. These agreements may be physically settled in our common stock, settled in cash or net share settled at our election. The forward sale price that we will receive upon physical settlement of a forward equity sale agreement will be subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate, less a spread adjustment and (ii) scheduled dividends during the term of the forward equity sale agreement. To the extent our forward equity sales agreements do not meet all the criteria to qualify for equity treatment on our consolidated balance sheet under ASC 815, Derivatives and Hedging, we recognize the change in the fair value of the derivative during the period in net income on our condensed consolidated statements of income. As of September 30, 2025 and December 31, 2024, our forward equity sales agreements meet the criteria to be classified in equity on our condensed consolidated balance sheet.

Shares issuable under a forward equity sale agreement are reflected in our diluted earnings per share calculations using the treasury stock method. Under this method, the number of our common shares used in calculating diluted earnings per share for each period is deemed to be increased by the excess, if any, of the number of common shares that would be issued upon full physical settlement of the forward equity sale agreement over the number of common shares that could be purchased by us in the market, as determined based on the average market price during the period, using the proceeds receivable upon full physical settlement, as determined based on the weighted average forward price during the period.

Our unvested restricted stock awards contain non-forfeitable rights to dividends, and accordingly, these awards are deemed to be participating securities. As a result, we apply the two-class method to calculate basic and diluted earnings per share. Under the two-class method, we allocate net income to common stockholders and the holders of unvested restricted stock awards using the weighted-average shares outstanding for each class and based on their respective participation rights to dividends declared and undistributed earnings. The computation of diluted earnings per share also includes the effect of potentially dilutive securities issued.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments to the existing guidance that further enhance income tax disclosures, primarily through standardization of income tax rate reconciliation categories and disaggregation of income taxes paid by jurisdiction. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the potential impact of this accounting standard on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public entities to enhance transparency of income statement disclosures on an interim and annual basis by providing additional disaggregated information related to certain costs and expenses. This guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the potential impact of this accounting standard on our consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides public entities with a practical expedient related to estimating credit losses for accounts receivable and contract assets arising from transactions accounted for under ASC 606. This guidance is effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. We are currently evaluating the potential impact of this accounting standard on our consolidated financial statements and related disclosures.