Omega Healthcare Investors Inc 10-Q for FY2021 Q1

Omega Healthcare Investors Inc (OHI)

10-Q 2021-05-04 For: 2021-03-31

Added on April 11, 2026

About this 10-Q

Omega Healthcare Investors Inc filed this 10-Q on May 4, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $273.77M; up 8.2% from $253.02M a year earlier
Net income: $164.37M; up 78.1% from net income of $92.28M a year earlier
Diluted EPS: $0.69; up 76.9% from $0.39 a year earlier

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Maryland	1-11316	38-3041398
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(IRS Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	OHI	New York Stock Exchange


Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ☐	Emerging growth company ☐


TABLE OF CONTENTS
		Page No.
PART I	Financial Information

Item 1.	Financial Statements of Omega Healthcare Investors, Inc.:
	Consolidated Balance Sheets
	March 31, 2021 (unaudited) and December 31, 2020	2
	Consolidated Statements of Operations (unaudited)
	Three months ended March 31, 2021 and 2020	3
	Consolidated Statements of Comprehensive Income (unaudited)
	Three months ended March 31, 2021 and 2020	4
	Consolidated Statements of Changes in Equity (unaudited)
	Three months ended March 31, 2021 and 2020	5
	Consolidated Statements of Cash Flows (unaudited)
	Three months ended March 31, 2021 and 2020	6
	Notes to Consolidated Financial Statements
	March 31, 2021 (unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	47

PART II	Other Information

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49

Item 6.	Exhibits	50


	March 31,		December 31,
	2021		2020
	(Unaudited)
ASSETS
Real estate properties
Real estate investments	$	9,261,190	$	8,702,154
Less accumulated depreciation		(2,069,822)		(1,996,914)
Real estate investments – net		7,191,368		6,705,240
Investments in direct financing leases – net		10,757		10,764
Mortgage notes receivable – net		890,068		885,313
		8,092,193		7,601,317
Other investments – net		444,719		467,442
Investments in unconsolidated joint ventures		204,646		200,638
Assets held for sale – net		7,922		81,452
Total investments		8,749,480		8,350,849

Cash and cash equivalents		51,376		163,535
Restricted cash		4,522		4,023
Contractual receivables – net		11,428		10,408
Other receivables and lease inducements		236,669		234,666
Goodwill		651,679		651,737
Other assets		117,648		82,231
Total assets	$	9,822,802	$	9,497,449

LIABILITIES AND EQUITY
Revolving line of credit	$	135,000	$	101,158
Term loans – net		49,914		186,349
Secured borrowings		367,685		369,524
Senior notes and other unsecured borrowings – net		4,855,286		4,512,221
Accrued expenses and other liabilities		256,338		280,824
Deferred income taxes		10,249		10,766
Total liabilities		5,674,472		5,460,842

Equity:
Preferred stock $1.00 par value authorized – 20,000 shares, issued and outstanding - none		—		—
Common stock $.10 par value authorized – 350,000 shares, issued and outstanding – 233,386 shares as of March 31, 2021 and 231,199 as of December 31, 2020		23,338		23,119
Common stock – additional paid-in capital		6,226,543		6,152,887
Cumulative net earnings		2,754,713		2,594,735
Cumulative dividends paid		(5,074,432)		(4,916,097)
Accumulated other comprehensive income (loss)		23,230		(12,768)
Total stockholders’ equity		3,953,392		3,841,876
Noncontrolling interest		194,938		194,731
Total equity		4,148,330		4,036,607
Total liabilities and equity	$	9,822,802	$	9,497,449


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended
	March 31,
	2021		2020
Revenues
Rental income	$	237,761	$	221,500
Income from direct financing leases		258		258
Mortgage interest income		23,625		19,685
Other investment income		11,652		10,652
Miscellaneous income		472		929
Total revenues		273,768		253,024

Expenses
Depreciation and amortization		84,849		82,643
General and administrative		16,152		15,923
Real estate taxes		2,729		3,666
Acquisition, merger and transition related costs		1,814		(225)
Impairment on real estate properties		28,689		3,639
Recovery on direct financing leases		(553)		—
(Recovery) provision for credit losses		(1,024)		1,486
Interest expense		58,521		55,202
Total expenses		191,177		162,334

Other income (expense)
Other income (expense) – net		231		(804)
Loss on debt extinguishment		(29,670)		—
Gain on assets sold – net		100,342		1,838
Total other income		70,903		1,034

Income before income tax expense and income from unconsolidated joint ventures		153,494		91,724
Income tax expense		(958)		(1,005)
Income from unconsolidated joint ventures		11,830		1,560
Net income		164,366		92,279
Net income attributable to noncontrolling interest		(4,388)		(2,364)
Net income available to common stockholders	$	159,978	$	89,915

Earnings per common share available to common stockholders:
Basic:
Net income available to common stockholders	$	0.69	$	0.40
Diluted:
Net income	$	0.69	$	0.39


									Accumulated
	Common		Additional		Cumulative				Other		Total
	Stock		Paid-in		Net		Cumulative		Comprehensive		Stockholders’		Noncontrolling		Total
	Par Value		Capital		Earnings		Dividends Paid		Income (Loss)		Equity		Interest		Equity
Balance at December 31, 2020	$	23,119	$	6,152,887	$	2,594,735	$	(4,916,097)	$	(12,768)	$	3,841,876	$	194,731	$	4,036,607
Stock related compensation		2		5,431		—		—		—		5,433		—		5,433
Vesting/exercising of equity compensation plan, net of tax withholdings		13		(2,525)		—		—		—		(2,512)		—		(2,512)
Dividend reinvestment and stock purchase plan		42		15,450		—		—		—		15,492		—		15,492
Equity Shelf Program		162		59,985		—		—		—		60,147		—		60,147
Vesting/exercising of Omega OP Units		—		(4,767)		—		—		—		(4,767)		4,767		—
Common dividends declared ($0.67 per share)		—		—		—		(158,335)		—		(158,335)		—		(158,335)
Conversion and redemption of Omega OP Units to common stock		—		82		—		—		—		82		(82)		—
Omega OP Units distributions		—		—		—		—		—		—		(9,855)		(9,855)
Comprehensive income:
Foreign currency translation		—		—		—		—		1,153		1,153		33		1,186
Cash flow hedges		—		—		—		—		34,845		34,845		956		35,801
Net income		—		—		159,978		—		—		159,978		4,388		164,366
Total comprehensive income																201,353
Balance at March 31, 2021	$	23,338	$	6,226,543	$	2,754,713	$	(5,074,432)	$	23,230	$	3,953,392	$	194,938	$	4,148,330


Balance at December 31, 2019	$	22,663	$	5,992,733	$	2,463,436	$	(4,303,546)	$	(39,858)	$	4,135,428	$	201,166	$	4,336,594
Cumulative effect of accounting change		—		—		(28,028)		—		—		(28,028)		(757)		(28,785)
		22,663		5,992,733		2,435,408		(4,303,546)		(39,858)		4,107,400		200,409		4,307,809
Stock related compensation		—		4,694		—		—		—		4,694		—		4,694
Vesting/exercising of equity compensation plan, net of tax withholdings		9		(3,158)		—		—		—		(3,149)		—		(3,149)
Dividend reinvestment and stock purchase plan		9		3,738		—		—		—		3,747		—		3,747
Equity Shelf Program		5		1,826		—		—		—		1,831		—		1,831
Vesting/exercising of Omega OP Units		—		(2,608)		—		—		—		(2,608)		2,608		—
Common dividends declared ($0.67 per share)		—		—		—		(154,661)		—		(154,661)		—		(154,661)
Conversion and redemption of Omega OP Units to common stock		—		336		—		—		—		336		(336)		—
Omega OP Units distributions		—		—		—		—		—		—		(7,290)		(7,290)
Comprehensive income:
Foreign currency translation		—		—		—		—		(18,288)		(18,288)		(483)		(18,771)
Cash flow hedges		—		—		—		—		(7,642)		(7,642)		(202)		(7,844)
Net income		—		—		89,915		—		—		89,915		2,364		92,279
Total comprehensive income																65,664
Balance at March 31, 2020	$	22,686	$	5,997,561	$	2,525,323	$	(4,458,207)	$	(65,788)	$	4,021,575	$	197,070	$	4,218,645


	Three Months Ended March 31,
	2021		2020

	(in thousands)
Rental income – operating leases	$	235,062	$	218,340
Variable lease income – operating leases		2,699		3,160
Total lease income	$	237,761	$	221,500


	Number of				Total			Initial
	Facilities			Country/	Investment			Annual
Period	SNF	ALF	Specialty	State	(in millions)			Cash Yield⁽¹⁾
Q1	—	17	7	AZ, CA, FL, IL, NJ, OR, PA, TN, TX, VA, WA	$	511.3	⁽²⁾	8.43	%
Q1	6	—	—	FL		83.1		9.25	%
Total	6	17	7		$	594.4



Segment	Financial Statement Line Item	Allowance for Credit Loss as of December 31, 2020		(Recovery) Provision for Credit Loss for the period ended March 31, 2021		Write-offs charged against allowance for the period ended March 31, 2021		Allowance for Credit Loss as of March 31, 2021
		(in thousands)
Segment A-4	Mortgage Notes Receivable	$	26,865	$	(913)	$	-	$	25,952
Segment B-3	Mortgage Notes Receivable		954		(38)		-		916
Segment C-5	Mortgage Notes Receivable		433		(107)		-		326
Segment E-6	Mortgage Notes Receivable		4,905		-		-		4,905
Segment F-2	Mortgage Notes Receivable		88		(45)		-		43
	Sub-total		33,245		(1,103)		-		32,142

Segment A-3	Investment in Direct Financing Leases		694		(6)		-		688
	Sub-total		694		(6)		-		688

Segment A-4	Other Investments		24,397		413		-		24,810
Segment B-3	Other Investments		5,113		217		-		5,330
Segment C-2	Other Investments		94		(40)		-		54
Segment D-5	Other Investments		1,853		(10)		(95)		1,748
	Sub-total		31,457		580		(95)		31,942

Segment A-4	Off-Balance Sheet Mortgage Commitments		24		38		-		62
Segment B-3	Off-Balance Sheet Note Commitments		2,305		(538)		-		1,767
Segment C-2	Off-Balance Sheet Note Commitments		116		5		-		121
	Sub-total		2,445		(495)		-		1,950

	Total	$	67,841	$	(1,024)	$	(95)	$	66,722



Rating	Financial Statement Line Item	2021		2020		2019		2018		2017		2016		2015 & older		Revolving Loans		Balance as of March 31, 2021
		(in thousands)
1	Mortgage Notes Receivable	$	-	$	-	$	-	$	-	$	-	$	-	$	66,621	$	-	$	66,621
2	Mortgage Notes Receivable		-		43,150		-		-		-		-		-		-		43,150
3	Mortgage Notes Receivable		-		-		-		-		-		-		35,964		-		35,964
4	Mortgage Notes Receivable		2,685		89,325		18,585		44,395		46,455		37,550		504,559		-		743,554
5	Mortgage Notes Receivable		-		-		-		19,000		-		-		7,544		-		26,544
6	Mortgage Notes Receivable		-		-		-		-		-		-		6,377		-		6,377
	Sub-total		2,685		132,475		18,585		63,395		46,455		37,550		621,065		-		922,210

3	Investment in Direct Financing Leases		-		-		-		-		-		-		11,445		-		11,445
	Sub-total		-		-		-		-		-		-		11,445		-		11,445

2	Other Investments		-		-		-		-		-		-		2,082		10,265		12,347
3	Other Investments		-		-		21,782		30,698		-		-		3,809		171,510		227,799
4	Other Investments		-		-		11,845		114,974		-		75,525		-		5,000		207,344
5	Other Investments		-		467		23,004		5,700		-		-		-		-		29,171
	Sub-total		-		467		56,631		151,372		-		75,525		5,891		186,775		476,661

Total		$	2,685	$	132,942	$	75,216	$	214,767	$	46,455	$	113,075	$	638,401	$	186,775	$	1,410,316


	March 31, 2021				December 31, 2020
	Agemo		Maplewood		Agemo		Maplewood
	(in thousands)				(in thousands)
Assets
Real estate investments – net	$	357,501		749,260	$	371,010	$	750,488
Assets held for sale		755		—		—		—
Other investments		34,253		162,368		34,253		147,148
Contractual receivables		615		979		346		887
Straight-line rent receivables		—		(52,892)		—		(56,664)
Lease inducement		—		68,326		—		69,666
Subtotal		393,124		928,041		405,609		911,525

Liabilities
Net in-place lease liability		—		(324)		—		(331)
Security deposit		(343)		(4,609)		—		—
Contingent liability		—		(43,915)		—		(43,915)
Subtotal		(343)		(48,848)		—		(44,246)

Collateral
Letters of credit		(9,253)		—		(9,253)		—
Personal guarantee		(8,000)		(40,000)		(8,000)		(40,000)
Other collateral		(358,256)		(749,260)		(371,010)		(750,488)
Subtotal		(375,509)		(789,260)		(388,263)		(790,488)

Maximum exposure to loss	$	17,272	$	89,933	$	17,346	$	76,791


	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
	Agemo		Maplewood		Agemo		Maplewood
	(in thousands)
Revenue
Rental income	$	11,492	$	19,032	$	15,287	$	10,140
Other investment income		1,157		2,788		1,241		1,202
Total⁽¹⁾	$	12,649	$	21,820	$	16,528	$	11,342


							Carrying Amount
	Ownership	Initial Investment			Facility	Facilities at	March 31,		December 31,
Entity ⁽¹⁾	%	Date		Investment⁽²⁾	Type	3/31/2021	2021		2020
Second Spring Healthcare Investments⁽³⁾	15%	11/1/2016	$	50,032	SNF	—	$	10,624	$	17,700
Second Spring II LLC⁽⁴⁾	15%	3/10/2021		10,330	SNF	5		9,873		—
Lakeway Realty, L.L.C.	51%	5/17/2019		73,834	Specialty facility	1		72,077		72,318
Cindat Joint Venture	49%	12/18/2019		105,688	ALF	67		111,871		110,360
OMG Senior Housing, LLC	50%	12/6/2019		—	Specialty facility	1		—		—
OH CHS SNP, Inc.	9%	12/20/2019		859	N/A	N/A		201		260
			$	240,743			$	204,646	$	200,638


	Three Months Ended March 31,
Entity	2021		2020

	(in thousands)
Second Spring Healthcare Investments⁽¹⁾	$	11,411	$	570
Second Spring II LLC		(457)		—
Lakeway Realty, L.L.C.		645		610
Cindat Joint Venture		486		646
OMG Senior Housing, LLC		(101)		(161)
OH CHS SNP, Inc.		(154)		(105)
Total	$	11,830	$	1,560


	Properties Held For Sale
	Number of	Net Book Value
	Properties	(in thousands)
December 31, 2020	22	$	81,452
Properties sold ⁽¹⁾	(21)		(81,252)
Properties added ⁽²⁾	5		7,722
March 31, 2021⁽³⁾	6	$	7,922


	(in thousands)
Balance as of December 31, 2020	$	651,737
Add: foreign currency translation		(58)
Balance as of March 31, 2021	$	651,679


Record	Payment	Dividend per
Date	Date	Common Share
February 8, 2021	February 16, 2021	$	0.67
May 3, 2021	May 17, 2021		0.67


	Shares issued	Average Price		Net Proceeds
Three Months Ended	(in millions)	Per Share		(in millions)
March 31, 2020	0.1	$	37.58	$	1.8
March 31, 2021	1.6		37.16		60.1


	Shares issued	Gross Proceeds
Three Months Ended	(in millions)	(in millions)
March 31, 2020	0.1	$	3.7
March 31, 2021	0.4		15.5


	As of and for the
	Three Months Ended
	March 31,
	2021		2020

	(in thousands)
Foreign Currency Translation:
Beginning balance	$	(18,427)	$	(35,100)
Translation gain (loss)		3,530		(31,888)
Realized gain (loss)		666		(70)
Ending balance		(14,231)		(67,058)

Derivative Instruments:
Cash flow hedges:
Beginning balance		17,718		(2,369)
Unrealized gain (loss)		35,191		(7,526)
Realized gain (loss)⁽¹⁾		610		(318)
Ending balance		53,519		(10,213)
Net investment hedge:
Beginning balance		(13,331)		(4,420)
Unrealized (loss) gain		(3,010)		13,187
Ending balance		(16,341)		8,767
Total accumulated other comprehensive income (loss) before noncontrolling interest		22,947		(68,504)
Add: portion included in noncontrolling interest		283		2,716
Total accumulated other comprehensive income (loss) for Omega	$	23,230	$	(65,788)


				Annual
				Interest Rate
				as of
				March 31,		March 31,		December 31,
	Net Proceeds		Maturity	2021		2021		2020

	(in millions)					(in thousands)
Secured borrowings:
HUD mortgages⁽¹⁾⁽²⁾			2046-2052	3.01	%	$	365,410	$	367,249
Term loan⁽³⁾			2022	3.75	%		2,275		2,275
							367,685		369,524
Unsecured borrowings:
Revolving line of credit⁽⁴⁾⁽⁵⁾			2021	1.36	%		135,000		101,158

Sterling term loan⁽⁵⁾⁽⁶⁾			N/A	N/A			—		136,700
Omega OP term loan⁽⁷⁾			2022	3.29	%		50,000		50,000
Deferred financing costs – net							(86)		(351)
Total term loans – net							49,914		186,349

Senior Notes:⁽⁵⁾
2023 notes⁽⁸⁾	$	692.0	2023	4.375	%		350,000		700,000
2024 notes		394.3	2024	4.950	%		400,000		400,000
2025 notes		397.7	2025	4.500	%		400,000		400,000
2026 notes		594.4	2026	5.250	%		600,000		600,000
2027 notes		683.0	2027	4.500	%		700,000		700,000
2028 notes		540.8	2028	4.750	%		550,000		550,000
2029 notes		487.8	2029	3.625	%		500,000		500,000
2031 notes		680.5	2031	3.375	%		700,000		700,000
2033 notes⁽⁹⁾		689.3	2033	3.250	%		700,000		—
Subordinated debt⁽²⁾			2021	9.000	%		20,000		20,000
Discount – net							(35,128)		(31,709)
Deferred financing costs – net							(29,586)		(26,070)
Total senior notes and other unsecured borrowings – net							4,855,286		4,512,221

Total unsecured borrowings – net							5,040,200		4,799,728

Total secured and unsecured borrowings – net⁽¹⁰⁾						$	5,407,885	$	5,169,252


	March 31, 2021				December 31, 2020
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

	(in thousands)
Assets:
Investments in direct financing leases – net	$	10,757	$	10,757	$	10,764	$	10,764
Mortgage notes receivable – net		890,068		929,623		885,313		924,353
Other investments – net		444,719		452,848		467,442		474,552
Total	$	1,345,544	$	1,393,228	$	1,363,519	$	1,409,669
Liabilities:
Revolving line of credit	$	135,000	$	135,000	$	101,158	$	101,158
Term loan		2,275		2,275		2,275		2,275
Sterling term loan		—		—		136,453		136,700
Omega OP term loan		49,914		50,000		49,896		50,000
4.375% notes due 2023 – net		348,674		379,864		696,981		770,635
4.95% notes due 2024 – net		396,966		445,362		396,714		441,194
4.50% notes due 2025 – net		397,114		436,262		396,924		444,652
5.25% notes due 2026 – net		596,614		685,558		596,437		697,993
4.50% notes due 2027 – net		691,275		770,272		690,909		794,294
4.75% notes due 2028 – net		543,152		607,222		542,899		633,950
3.625% notes due 2029 – net		489,774		511,116		489,472		532,248
3.375% notes due 2031 – net		682,250		693,896		681,802		731,541
3.25% notes due 2033 – net		689,405		671,583		—		—
HUD mortgages – net		365,410		384,979		367,249		409,004
Subordinated debt – net		20,062		21,207		20,083		21,599
Total	$	5,407,885	$	5,794,596	$	5,169,252	$	5,767,243



Total commitments	$	596,615
Amounts funded to date⁽¹⁾		(454,837)
Remaining commitments ⁽²⁾	$	141,778


					Maximum
				Total Number of	Number (or
				Shares	Approximate
				Purchased as	Dollar Value) of
				Part of Publicly	Shares that may
	Total Number			Announced	be Purchased
	of Shares	Average Price		Plans or	Under these Plans
Period	Purchased	Paid per Share		Programs	or Programs
January 1, 2021 to January 31, 2021	—	$	—	—	—
February 1, 2021 to February 28, 2021	—		—	—	—
March 1, 2021 to March 31, 2021	—		—	—	—
Total	—	$	—	—	—


Exhibit No.
3.1		Amended and Restated Bylaws of Omega Healthcare Investors, Inc. as of April 8, 2021 (incorporated by reference to Exhibit 3.1 on the Company’s Form 8-K, filed on April 14, 2021).
4.1		Indenture dated as of March 10, 2021, among Omega Healthcare Investors, Inc., OHI Healthcare Properties Limited Partnership, as Subsidiary Guarantor, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 on the Company’s Form 8-K, filed on March 10, 2021).
10.1		Form of Amendment to Employment Agreement for the Company’s executive officers, effective as of January 1, 2021 for the Company’s executive officers (incorporated by reference to Exhibit 10.12 on the Company’s Form 10-K, filed on February 22, 2021).
22.1		Subsidiary guarantors of guaranteed securities.*
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Omega Healthcare Investors, Inc.*
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Omega Healthcare Investors, Inc.*
32.1		Section 1350 Certification of the Chief Executive Officer of Omega Healthcare Investors, Inc.*
32.2		Section 1350 Certification of the Chief Financial Officer of Omega Healthcare Investors, Inc.*
101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104		Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101).

Date: May 4, 2021	By:	/S/ C. TAYLOR PICKETT
		C. Taylor Pickett
		Chief Executive Officer

Date: May 4, 2021	By:	/S/ ROBERT O. STEPHENSON
		Robert O. Stephenson
		Chief Financial Officer