Omega Healthcare Investors Inc 10-Q for FY2023 Q1

Omega Healthcare Investors Inc (OHI)

10-Q 2023-05-03 For: 2023-03-31

Added on April 11, 2026

About this 10-Q

Omega Healthcare Investors Inc filed this 10-Q on May 3, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $218.2M; down 12.5% from $249.32M a year earlier
Net income: $36.85M; down 81.1% from net income of $195.16M a year earlier
Diluted EPS: $0.15; down 81.0% from $0.79 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


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. (Unaudited):
	Consolidated Balance Sheets	2
	March 31, 2023 and December 31, 2022
	Consolidated Statements of Operations	3
	Three months ended March 31, 2023 and 2022
	Consolidated Statements of Comprehensive Income	4
	Three months ended March 31, 2023 and 2022
	Consolidated Statements of Equity	5
	Three months ended March 31, 2023 and 2022
	Consolidated Statements of Cash Flows	6
	Three months ended March 31, 2023 and 2022
	Notes to Consolidated Financial Statements	7
	March 31, 2023

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

PART II	Other Information

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 6.	Exhibits	51


	March 31,		December 31,
	2023		2022
	(Unaudited)
ASSETS
Real estate assets
Buildings and improvements	$	7,303,014	$	7,347,853
Land		926,180		923,605
Furniture and equipment		498,334		499,902
Construction in progress		94,698		88,904
Total real estate assets		8,822,226		8,860,264
Less accumulated depreciation		(2,384,191)		(2,322,773)
Real estate assets – net		6,438,035		6,537,491
Investments in direct financing leases – net		8,670		8,503
Real estate loans receivable – net		1,061,869		1,042,731
Investments in unconsolidated joint ventures		181,339		178,920
Assets held for sale		25,766		9,456
Total real estate investments		7,715,679		7,777,101
Non-real estate loans receivable – net		189,880		225,281
Total investments		7,905,559		8,002,382

Cash and cash equivalents		245,182		297,103
Restricted cash		3,336		3,541
Contractual receivables – net		7,999		8,228
Other receivables and lease inducements		190,842		177,798
Goodwill		643,500		643,151
Other assets		293,788		272,960
Total assets	$	9,290,206	$	9,405,163

LIABILITIES AND EQUITY
Revolving credit facility	$	19,784	$	19,246
Secured borrowings		364,773		366,596
Senior notes and other unsecured borrowings – net		4,903,377		4,900,992
Accrued expenses and other liabilities		316,661		315,047
Total liabilities		5,604,595		5,601,881

Equity:
Preferred stock $1.00 par value authorized – 20,000 shares, issued and outstanding – none		—		—
Common stock $0.10 par value authorized – 350,000 shares, issued and outstanding – 234,346 shares as of March 31, 2023 and 234,252 shares as of December 31, 2022		23,434		23,425
Additional paid-in capital		6,322,160		6,314,203
Cumulative net earnings		3,474,343		3,438,401
Cumulative dividends paid		(6,344,413)		(6,186,986)
Accumulated other comprehensive income		21,533		20,325
Total stockholders’ equity		3,497,057		3,609,368
Noncontrolling interest		188,554		193,914
Total equity		3,685,611		3,803,282
Total liabilities and equity	$	9,290,206	$	9,405,163


☒	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,
	2023		2022
Revenues
Rental income	$	189,077	$	216,883
Income from direct financing leases		254		256
Interest income		28,420		31,143
Miscellaneous income		451		1,033
Total revenues		218,202		249,315

Expenses
Depreciation and amortization		81,192		82,752
General and administrative		20,526		16,385
Real estate taxes		3,997		3,603
Acquisition, merger and transition related costs		639		1,513
Impairment on real estate properties		38,988		3,511
(Recovery) provision for credit losses		(4,057)		1,824
Interest expense		58,546		58,145
Total expenses		199,831		167,733

Other income (expense)
Other income (expense) – net		2,720		(455)
Loss on debt extinguishment		(6)		(6)
Gain on assets sold – net		13,637		113,637
Total other income		16,351		113,176

Income before income tax benefit (expense) and income from unconsolidated joint ventures		34,722		194,758
Income tax benefit (expense)		1,292		(1,225)
Income from unconsolidated joint ventures		831		1,623
Net income		36,845		195,156
Net income attributable to noncontrolling interest		(903)		(5,549)
Net income available to common stockholders	$	35,942	$	189,607

Earnings per common share available to common stockholders:
Basic:
Net income available to common stockholders	$	0.15	$	0.79
Diluted:
Net income available to common stockholders	$	0.15	$	0.79


									Accumulated
	Common		Additional		Cumulative		Cumulative		Other		Total
	Stock		Paid-in		Net		Dividends		Comprehensive		Stockholders’		Noncontrolling		Total
	Par Value		Capital		Earnings		Paid		Income (Loss)		Equity		Interest		Equity
Balance at December 31, 2022	$	23,425	$	6,314,203	$	3,438,401	$	(6,186,986)	$	20,325	$	3,609,368	$	193,914	$	3,803,282
Stock related compensation		—		8,792		—		—		—		8,792		—		8,792
Issuance of common stock		9		1,976		—		—		—		1,985		—		1,985
Common dividends declared ($0.67 per share)		—		—		—		(157,427)		—		(157,427)		—		(157,427)
Vesting/exercising of Omega OP Units		—		(2,811)		—		—		—		(2,811)		2,811		—
Omega OP Units distributions		—		—		—		—		—		—		(9,131)		(9,131)
Capital contribution from noncontrolling interest holder in consolidated JV		—		—		—		—		—		—		22		22
Other comprehensive income		—		—		—		—		1,208		1,208		35		1,243
Net income		—		—		35,942		—		—		35,942		903		36,845
Balance at March 31, 2023	$	23,434	$	6,322,160	$	3,474,343	$	(6,344,413)	$	21,533	$	3,497,057	$	188,554	$	3,685,611


Balance at December 31, 2021	$	23,906	$	6,427,566	$	3,011,474	$	(5,553,908)	$	(2,200)	$	3,906,838	$	201,388	$	4,108,226
Stock related compensation		—		6,905		—		—		—		6,905		—		6,905
Issuance of common stock		12		1,135		—		—		—		1,147		—		1,147
Repurchase of common stock		(98)		(27,223)		—		—		—		(27,321)		—		(27,321)
Common dividends declared ($0.67 per share)		—		—		—		(160,687)		—		(160,687)		—		(160,687)
Vesting/exercising of Omega OP Units		—		(7,176)		—		—		—		(7,176)		7,176		—
Omega OP Units distributions		—		—		—		—		—		—		(5,276)		(5,276)
Capital contribution from noncontrolling interest holder in consolidated JV		—		—		—		—		—		—		2,925		2,925
Other comprehensive income		—		—		—		—		8,518		8,518		251		8,769
Net income		—		—		189,607		—		—		189,607		5,549		195,156
Balance at March 31, 2022	$	23,820	$	6,401,207	$	3,201,081	$	(5,714,595)	$	6,318	$	3,917,831	$	212,013	$	4,129,844


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities
Net income	$	36,845	$	195,156
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		81,192		82,752
Impairment on real estate properties		38,988		3,511
Provision for rental income		12,500		3,151
(Recovery) provision for credit losses		(4,057)		1,824
Amortization of deferred financing costs and loss on debt extinguishment		3,259		3,199
Accretion of direct financing leases		26		19
Stock-based compensation expense		8,744		6,860
Gain on assets sold – net		(13,637)		(113,637)
Amortization of acquired in-place leases – net		(6,131)		(1,608)
Straight-line rent and effective interest receivables		(12,576)		(23,674)
Interest paid-in-kind		(2,555)		(2,196)
Loss (income) from unconsolidated joint ventures		137		(677)
Change in operating assets and liabilities – net:
Contractual receivables		180		(1,912)
Lease inducements		(12,323)		1,932
Other operating assets and liabilities		(19,232)		(22,498)
Net cash provided by operating activities		111,360		132,202
Cash flows from investing activities
Acquisition of real estate		(26,383)		(113,157)
Net proceeds from sale of real estate investments		17,559		332,552
Investments in construction in progress		(4,780)		(4,667)
Placement of loan principal		(31,240)		(103,026)
Collection of loan principal		52,011		79,101
Distributions from unconsolidated joint ventures in excess of earnings		382		61
Capital improvements to real estate investments		(5,340)		(13,548)
Receipts from insurance proceeds		448		22
Net cash provided by investing activities		2,657		177,338
Cash flows from financing activities
Proceeds from long-term borrowings		—		420,208
Payments of long-term borrowings		(1,913)		(66,896)
Payments of financing related costs		(6)		(6)
Net proceeds from issuance of common stock		1,985		1,147
Repurchase of common stock		—		(27,321)
Dividends paid		(157,379)		(160,641)
Noncontrolling members’ contributions to consolidated joint venture		22		22
Distributions to Omega OP Unit Holders		(9,131)		(5,276)
Net cash (used in) provided by financing activities		(166,422)		161,237
Effect of foreign currency translation on cash, cash equivalents and restricted cash		279		(407)
(Decrease) increase in cash, cash equivalents and restricted cash		(52,126)		470,370
Cash, cash equivalents and restricted cash at beginning of period		300,644		24,411
Cash, cash equivalents and restricted cash at end of period	$	248,518	$	494,781


	Number of			Total Real Estate			Initial
	Facilities			Assets Acquired			Annual
Period	SNF	ALF	Country/State	(in millions)			Cash Yield⁽¹⁾
Q1	—	6	U.K.	$	26.4	⁽²⁾	8.0	%
Total	—	6		$	26.4


Rating	Financial Statement Line Item	Allowance for Credit Loss as of December 31, 2022		Provision (recovery) for Credit Loss for the three months ended March 31, 2023		Write-offs charged against allowance for the three months ended March 31, 2023		Other additions to the allowance for the three months ended March 31, 2023			Allowance for Credit Loss as of March 31, 2023
		(in thousands)
1	Real estate loan receivable	$	162	$	351	$	—	$	—		$	513
2	Real estate loans receivable		157		(111)		—		—			46
3	Real estate loans receivable		15,110		(421)		—		—			14,689
4	Real estate loans receivable		33,666		(9,445)		—		—			24,221
6	Real estate loans receivable		52,265		(2,294)		—		—			49,971
	Sub-total		101,360		(11,920)		—		—			89,440

5	Investment in direct financing leases		2,816		(193)		—		—			2,623
	Sub-total		2,816		(193)		—		—			2,623

2	Non-real estate loans receivable		859		(567)		—		—			292
3	Non-real estate loans receivable		2,079		(1,727)		—		—			352
4	Non-real estate loans receivable		634		(361)		—		—			273
5	Non-real estate loans receivable		18,619		66		—		25,200	⁽¹⁾		43,885
6	Non-real estate loans receivable		61,677		8,086		—		—			69,763
	Sub-total		83,868		5,497		—		25,200			114,565

2	Off-balance sheet non-real estate loan commitments		207		(96)		—		—			111
3	Off-balance sheet non-real estate loan commitments		29		(23)		—		—			6
3	Off-balance sheet real estate loan commitments		—		2,660		—		—			2,660
4	Off-balance sheet real estate loan commitments		84		(62)		—		—			22
6	Off-balance sheet non-real estate loan commitments		—		80		—		—			80
	Sub-total		320		2,559		—		—			2,879

	Total	$	188,364	$	(4,057)	$	—	$	25,200		$	209,507


Rating	Financial Statement Line Item	Allowance for Credit Loss at December 31, 2021		Provision (recovery) for Credit Loss for the three months ended March 31, 2022			Write-offs charged against allowance for the three months ended March 31, 2022		Allowance for Credit Loss as of March 31, 2022
		(in thousands)
2	Real estate loans receivable	$	14	$	48		$	—	$	62
3	Real estate loans receivable		5,367		983			—		6,350
4	Real estate loans receivable		20,577		1,634			—		22,211
5	Real estate loans receivable		136		(23)			—		113
6	Real estate loans receivable		56,480		(5,135)	⁽¹⁾		—		51,345
	Sub-total		82,574		(2,493)			—		80,081

3	Investment in direct financing leases		530		5			—		535
	Sub-total		530		5			—		535

2	Non-real estate loans receivable		29		52			—		81
3	Non-real estate loans receivable		1,206		205			—		1,411
4	Non-real estate loans receivable		56		475			—		531
5	Non-real estate loans receivable		7,861		4,704	⁽²⁾		—		12,565
6	Non-real estate loans receivable		51,269		(730)			—		50,539
	Sub-total		60,421		4,706			—		65,127

2	Off-balance sheet non-real estate loan commitments		7		2			—		9
3	Off-balance sheet non-real estate loan commitments		207		20			—		227
3	Off-balance sheet real estate loan commitments		251		(151)			—		100
4	Off-balance sheet non-real estate loan commitments		216		(78)			—		138
4	Off-balance sheet real estate loan commitments		117		(106)			—		11
6	Off-balance sheet non-real estate loan commitments		143		(81)			—		62
			941		(394)			—		547

	Total	$	144,466	$	1,824		$	—	$	146,290


							Carrying Amount
	Ownership	Initial Investment			Facility	Facilities at	March 31,		December 31,
Entity	%	Date	Investment⁽¹⁾		Type	3/31/2023	2023		2022
Second Spring Healthcare Investments	15%	11/1/2016	$	50,032	SNF	—	$	10,892	$	10,975
Lakeway Realty, L.L.C.	51%	5/17/2019		73,834	Specialty facility	1		69,851		70,151
Cindat Joint Venture	49%	12/18/2019		105,688	ALF	63		100,102		97,382
OMG Senior Housing, LLC	50%	12/6/2019		—	Specialty facility	1		—		—
OH CHS SNP, Inc.	9%	12/20/2019		1,013	N/A	N/A		494		412
			$	230,567			$	181,339	$	178,920


	(in thousands)
Balance as of December 31, 2022	$	643,151
Foreign currency translation		349
Balance as of March 31, 2023	$	643,500


Record	Payment	Dividend per
Date	Date	Common Share
February 6, 2023	February 15, 2023	$	0.67
May 1, 2023	May 15, 2023		0.67


Period Ended	Shares issued	Gross Proceeds
March 31, 2022	0.1	$	2.3
March 31, 2023	0.1		2.3


	As of and for the
	Three Months Ended March 31,
	2023		2022

	(in thousands)
Foreign Currency Translation:
Beginning balance	$	(85,004)	$	(24,012)
Translation gain (loss)		15,750		(14,630)
Realized gain (loss)		84		(26)
Ending balance		(69,170)		(38,668)

Derivative Instruments:
Cash flow hedges:
Beginning balance		86,356		30,407
Unrealized (loss) gain		(10,624)		18,612
Realized gain ⁽¹⁾		1,074		966
Ending balance		76,806		49,985
Net investment hedges:
Beginning balance		18,634		(9,588)
Unrealized (loss) gain		(5,041)		3,847
Ending balance		13,593		(5,741)
Total accumulated other comprehensive income before noncontrolling interest		21,229		5,576
Add: portion included in noncontrolling interest		304		742
Total accumulated other comprehensive income for Omega	$	21,533	$	6,318


		Annual
		Interest Rate
		as of
		March 31,		March 31,		December 31,
	Maturity	2023		2023		2022

				(in thousands)
Secured borrowings:
HUD mortgages⁽¹⁾⁽²⁾	2046-2052	3.01	%⁽³⁾	$	342,795	$	344,708
2023 term loan⁽⁴⁾	2023	8.50	%		2,161		2,161
2024 term loan⁽⁵⁾	2024	10.17	%		19,817		19,727
Total secured borrowings					364,773		366,596

Unsecured borrowings:
Revolving credit facility⁽⁶⁾⁽⁷⁾	2025	6.04	%		19,784		19,246
					19,784		19,246
Senior notes and other unsecured borrowings:
2023 notes⁽⁶⁾	2023	4.375	%		350,000		350,000
2024 notes⁽⁶⁾	2024	4.950	%		400,000		400,000
2025 notes⁽⁶⁾	2025	4.500	%		400,000		400,000
2026 notes⁽⁶⁾	2026	5.250	%		600,000		600,000
2027 notes⁽⁶⁾	2027	4.500	%		700,000		700,000
2028 notes⁽⁶⁾	2028	4.750	%		550,000		550,000
2029 notes⁽⁶⁾	2029	3.625	%		500,000		500,000
2031 notes⁽⁶⁾	2031	3.375	%		700,000		700,000
2033 notes⁽⁶⁾	2033	3.250	%		700,000		700,000
OP term loan⁽⁸⁾	2025	6.29	%		50,000		50,000
Deferred financing costs – net					(21,099)		(22,276)
Discount – net					(25,524)		(26,732)
Total senior notes and other unsecured borrowings – net					4,903,377		4,900,992

Total unsecured borrowings – net					4,923,161		4,920,238

Total secured and unsecured borrowings – net^(9)(10)				$	5,287,934	$	5,286,834


	March 31, 2023				December 31, 2022
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value

	(in thousands)
Assets:
Investments in direct financing leases – net	$	8,670	$	8,670	$	8,503	$	8,503
Real estate loans receivable – net		1,061,869		1,087,327		1,042,731		1,080,890
Non-real estate loans receivable – net		189,880		190,553		225,281		228,498
Total	$	1,260,419	$	1,286,550	$	1,276,515	$	1,317,891
Liabilities:
Revolving credit facility	$	19,784	$	19,784	$	19,246	$	19,246
2023 term loan		2,161		2,161		2,161		2,275
2024 term loan		19,817		19,750		19,727		19,750
OP term loan		49,788		50,000		49,762		50,000
4.375% notes due 2023 – net		349,811		347,763		349,669		347,998
4.95% notes due 2024 – net		398,989		395,236		398,736		394,256
4.50% notes due 2025 – net		398,636		383,068		398,446		388,920
5.25% notes due 2026 – net		598,024		588,930		597,848		589,104
4.50% notes due 2027 – net		694,204		652,666		693,837		657,468
4.75% notes due 2028 – net		545,168		510,098		544,916		507,425
3.625% notes due 2029 – net		492,192		418,695		491,890		411,090
3.375% notes due 2031 – net		685,830		552,510		685,382		540,386
3.25% notes due 2033 – net		690,735		511,931		690,506		507,976
HUD mortgages – net		342,795		265,148		344,708		266,161
Total	$	5,287,934	$	4,717,740	$	5,286,834	$	4,702,055



Construction and capital expenditure mortgage loan commitments	$	4,365
Lessor construction and capital commitments under lease agreements		224,101
Other real estate loan commitments		58,073
Non-real estate loan commitments		95,381
Total remaining commitments ⁽¹⁾	$	381,920


	Three Months Ended March
	2023		2022

	(in thousands, except per share amounts)
Numerator:
Net income available to common stockholders – basic	$	35,942	$	189,607
Add: net income attributable to OP Units		1,048		5,549
Net income available to common stockholders – diluted	$	36,990	$	195,156
Denominator:
Denominator for basic earnings per share		234,954		239,527
Effect of dilutive securities:
Common stock equivalents		1,384		963
Noncontrolling interest – Omega OP Units		6,850		7,066
Denominator for diluted earnings per share		243,188		247,556

Earnings per share – basic:
Net income available to common stockholders	$	0.15	$	0.79
Earnings per share – diluted:
Net income available to common stockholders	$	0.15	$	0.79


Exhibit No.
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 (unaudited) from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of 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 3, 2023	By:	/S/ C. TAYLOR PICKETT
		C. Taylor Pickett
		Chief Executive Officer

Date: May 3, 2023	By:	/S/ ROBERT O. STEPHENSON
		Robert O. Stephenson
		Chief Financial Officer


Date:	May 3, 2023

/s/	C. TAYLOR PICKETT
	C. Taylor Pickett
	Chief Executive Officer