NorthStar Healthcare Reports Q1 Profit Amid Merger Progress

The company boosted occupancy and income across its senior housing assets while preparing for a key shareholder vote on its merger with Compound Holdco.

May 09, 2025

The Merger Moves Forward

NorthStar Healthcare Income, Inc. entered 2025 with momentum. The company reported $7 million in first-quarter net income, reversing a year-ago loss and signaling clear progress toward its strategic goals. The positive results followed a series of asset sales and ongoing efforts to strengthen core portfolio performance.

On the corporate side, the planned merger with Compound Holdco LLC remains on track. If approved at the June 4 shareholder meeting, the deal would result in a $3.03-per-share cash payout. NorthStar’s board has unanimously backed the merger, and the company is working to meet all closing conditions. As of May 5, unrestricted cash stood at $335.2 million —positioned to support a smooth transaction.

Operations Delivered Across the Board

NorthStar’s Q1 revenue rose to $53.6 million, up 10% from the same period in 2024. The company managed expenses effectively, with operating costs holding steady. That helped push net operating income to $19.6 million —up nearly 28% year over year.

Occupancy across senior housing assets climbed to 91.1%, a 2.5 percentage point gain. All major property managers contributed to the increase, led by Solstice Senior Living’s 32-property Winterfell portfolio. Together, these communities generated 73% of the quarter’s total rental income.

The boost in performance wasn’t limited to higher occupancy. NorthStar also implemented targeted rate increases and prioritized cost control, especially around wages, utilities, and marketing spend. These actions helped widen the margin on same-store properties, with NOI for that group increasing 26.8%.

Dispositions Strengthened the Balance Sheet

In January, NorthStar completed the sale of five assets—including its four net lease properties in the Arbors portfolio and one Rochester facility. Together, those transactions brought in $87.2 million in gross proceeds and reduced mortgage debt by over $79 million. After closing costs, the company retained $7.8 million in cash—part of a broader strategy to unlock value from non-core assets.

NorthStar also continues to work with the court-appointed receiver overseeing the Rochester Sub-Portfolio. The company no longer includes those properties in its reported financials but will continue to accrue interest and related costs until ownership formally transfers.

Focused on Financial Discipline

Debt levels declined quarter over quarter. Total mortgage notes payable dropped from $856 million to $773 million, reflecting scheduled repayments and sale-related paydowns. Leverage now stands at roughly 53% of total assets, well within the limits set by NorthStar’s charter.

The company has not resumed regular shareholder distributions since suspending them in 2019. However, a special $0.50-per-share distribution was issued in 2022. Additional distributions, if any, will depend on the outcome of the merger. NorthStar has made it clear that preserving liquidity remains a priority in the near term.

On Track for a June Close

Performance through Q1 positions NorthStar to deliver on its key objective: a full-company exit via merger. The board remains focused on maximizing shareholder value, and the company has already met several transaction milestones. A special shareholder meeting will determine the path forward, but operational and financial progress made this quarter signals strong alignment between near-term execution and long-term strategy.