• Revenue: $277 million for Q1 2025, up from $243 million in Q1 2024.
• Net Income: $112 million or $0.33 per share for Q1 2025, compared to $69 million or $0.27 per share in Q1 2024.
• Nareit FFO: $184 million or $0.62 per share for Q1 2025, compared to $153 million or $0.60 per share in Q1 2024.
• Adjusted FFO: $221 million or $0.75 per share for Q1 2025.
• Funds Available for Distribution (FAD): $211 million or $0.71 per share for Q1 2025.
• Debt-to-EBITDA: Reduced to 3.7 times.
• Cash and Credit Facility: $368 million in cash and full borrowing capacity of $1.45 billion credit facility.
• Fixed Charge Coverage Ratio: 5.2 times.
• Leverage: Funded debt to annualized adjusted normalized EBITDA at 3.72 times.
• New Investments: $457 million in Q1 2025, including $112 million in new investments and $34 million in CapEx.
• Occupancy Rate: Maplewood's core 17 facilities reached 94% occupancy as of April 2025.
• Guidance: Raised and narrowed full-year adjusted FFO guidance to $2.95 to $3.01 per share.

• Warning! GuruFocus has detected 6 Warning Signs with OHI.

Release Date: May 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Omega Healthcare Investors Inc (NYSE:OHI) reported strong financial results for Q1 2025, with adjusted funds from operations (AFFO) of $0.75 per share and funds available for distribution (FAD) of $0.71 per share.
• The company raised and narrowed its 2025 AFFO guidance to a range of $2.95 to $3.01 per share, reflecting strong earnings performance.
• Omega Healthcare Investors Inc (NYSE:OHI) successfully reduced its leverage to 3.7 times debt-to-EBITDA, the lowest in over 10 years.
• The company completed significant new investments, including a $344 million acquisition of 45 care homes in the UK and Jersey, with an initial cash yield of 10%.
• Omega Healthcare Investors Inc (NYSE:OHI) maintained a strong balance sheet with $368 million in cash and full borrowing capacity of its $1.45 billion credit facility.

Negative Points

• Genesis, a major operator, did not pay its contractual rent of $4.2 million in March, leading Omega Healthcare Investors Inc (NYSE:OHI) to partially pull a letter of credit to cover the shortfall.
• The dilutive impact of significant year-to-date share issuances tempered the strong earnings performance.
• The company faces potential risks from Medicaid reform and provider tax changes, which could impact revenue streams.
• Omega Healthcare Investors Inc (NYSE:OHI) is not currently engaged in restructuring activity with major operators, but there are ongoing concerns about operator liquidity and financial stability.
• The company has exposure to foreign exchange risk due to its significant investments in the UK, which could impact financial performance.

Q & A Highlights

Q: Can you provide more details on Genesis not paying rent and interest in March but then paying in April? A: Taylor Pickett, CEO, explained that Genesis faced a liquidity issue due to their ABL lender tightening the borrowing base. However, Omega's credit position with Genesis is strong, and they expect Genesis to continue paying. The geographic footprint of the Genesis portfolio is primarily in the Mid-Atlantic region, and Genesis is on a cash basis for accounting.

Q: Can you share more details on the UK portfolio acquisition and the attractive 10% yield? A: Vikas Gupta, CIO, stated that the acquisition involved 45 care homes across the UK and Jersey, leased to six operators. Omega's strong platform in the UK allowed them to close the deal quickly, and the assets fit well with the operators' geographies.

Q: Have you seen any immigration impact on labor availability and wage pressures? A: Megan Krull, SVP of Operations, noted that they have not observed any significant impact from immigration on labor availability or wage pressures at this point.

Q: What is the status of the LaVie master lease and its transition to Avartis? A: Vikas Gupta, CIO, mentioned that LaVie is working towards exiting bankruptcy, and the Omega LaVie master lease will be assumed by Avartis with no change in rent expected. The lease includes a 2.5% escalator, and the portfolio has strong coverage.

Q: How do you assess the impact of potential Medicaid changes on your underwriting criteria? A: Vikas Gupta, CIO, stated that their underwriting criteria have not changed despite potential Medicaid changes. They continue to monitor the situation closely but have not made any adjustments yet.

Q: Can you provide more information on the PACS portfolio and its coverage levels? A: Vikas Gupta, CIO, explained that the PACS portfolio consists of around 50 buildings performing well, and they are confident in their ability to retenant them at current or higher rent levels. Coverage levels have remained strong.

Q: What is the outlook for acquisition opportunities in the US and UK for the rest of the year? A: Vikas Gupta, CIO, indicated that the pipeline is currently more US-heavy, but they continue to evaluate opportunities in both regions. They focus on accretive opportunities with current and new partners.

Q: How do you manage FX exposure in your UK operations? A: Robert Stephenson, CFO, explained that they use net investment hedges and cross-currency swaps when appropriate. They collect rent in pound sterling and pay for acquisitions in the same currency, providing a natural hedge.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.