| --- | --- | --- | --- | |------------------------------------|---------------------------|----------------------------------------|-----------------------------------| | U NSECURED N OTES Quarter Ending | Debt / Adj. Total Assets | Unencumbered Assets / Unsecured Debt | Secured Debt / Adj. Total Assets | | Requirement | <= 60% | >= 150% | <= 40% | | March 31, 2023 | 50% | 197% | 0% | | June 30, 2023 | 48% | 202% | 0% | | September 30, 2023 | 48% | 202% | 0% | | December 31, 2023 | 48% | 203% | 0% | | Stat ...

Table of Contents FORM 10-Q (Mark One) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 303 International Circle, Suite 200, Hunt Valley, MD 21030 (Address of principal executive offices) (410) 427-1700 (Exact name of registrant as specified in its charter) ...

PART I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Omega Healthcare Investors, Inc.'s unaudited consolidated financial statements as of June 30, 2023, and for the three and six months then ended, covering Balance Sheets, Statements of Operations, Comprehensive Income, Equity, and Cash Flows, alongside detailed accounting policy notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2023, Omega's total assets were approximately $9.404 billion, nearly unchanged from $9.405 billion at December 31, 2022, with total liabilities decreasing slightly to $5.591 billion and total equity increasing to $3.813 billion over the same period Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$9,404,033** | **$9,405,163** | | Real estate assets – net | $6,489,376 | $6,537,491 | | Real estate loans receivable – net | $1,096,806 | $1,042,731 | | Cash and cash equivalents | $350,691 | $297,103 | | **Total Liabilities** | **$5,591,441** | **$5,601,881** | | Senior notes and other unsecured borrowings – net | $4,905,761 | $4,900,992 | | **Total Equity** | **$3,812,592** | **$3,803,282** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2023, total revenues were $250.2 million and net income was $61.5 million, while for the six months ended June 30, 2023, revenues reached $468.4 million and net income was $98.4 million, a significant decrease from the prior year primarily due to lower gain on assets sold Key Operating Results (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$250,187** | **$244,649** | **$468,389** | **$493,964** | | Rental income | $219,101 | $211,428 | $408,178 | $428,311 | | Impairment on real estate properties | $21,114 | $7,695 | $60,102 | $11,206 | | Gain on assets sold – net | $12,243 | $25,180 | $25,880 | $138,817 | | **Net Income** | **$61,521** | **$91,915** | **$98,366** | **$287,071** | | **Diluted EPS** | **$0.25** | **$0.38** | **$0.40** | **$1.17** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, net cash provided by operating activities decreased to $281.7 million, while investing activities shifted to a net use of $184.7 million due to lower asset sale proceeds, and financing activities saw a reduced net use of $41.7 million primarily from increased stock issuance and fewer repurchases Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $281,736 | $305,196 | | Net cash (used in) provided by investing activities | $(184,669) | $277,166 | | Net cash used in financing activities | $(41,685) | $(436,756) | | **Increase in cash, cash equivalents and restricted cash** | **$55,867** | **$144,053** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information on the company's accounting policies and financial activities, covering operator collectibility issues, rent deferrals, restructurings, real estate transactions, loan portfolio, debt structure, hedging, and legal proceedings - The company's core business is providing financing and capital to the long-term healthcare industry, focusing on skilled nursing facilities (SNFs) and assisted living facilities (ALFs) in the U.S. and U.K. through triple-net leases and real estate loans[23](index=23&type=chunk) - As of June 30, 2023, **18 operators were on a cash basis** for revenue recognition, representing **25.8% of total revenues** for the first six months of 2023[49](index=49&type=chunk) - During the first six months of 2023, the company allowed nine operators to defer **$33.6 million** of contractual rent and interest, primarily related to LaVie (**$19.0M**), Healthcare Homes (**$8.2M**), and Agemo (**$1.9M**)[50](index=50&type=chunk) - On August 1, 2023, the company repaid its **$350 million** of 4.375% senior notes that matured on that date using available cash[154](index=154&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operating results, emphasizing ongoing operator challenges such as labor shortages, occupancy recovery, and the phase-out of government pandemic support, alongside collectibility issues, portfolio restructurings, investment activities, liquidity, and quarterly performance analysis [Outlook, Trends and Other Conditions](index=54&type=section&id=Outlook%2C%20Trends%20and%20Other%20Conditions) The company remains cautious due to significant post-pandemic challenges impacting operators, including persistent labor shortages, elevated costs, slow occupancy recovery, and uncertainty regarding Medicare and Medicaid reimbursement rates, further pressured by the May 11, 2023, expiration of the public health emergency and associated financial support - Operators continue to be significantly impacted by post-pandemic effects, including occupancy declines, labor shortages, and cost increases, leading to several operators failing to make contractual payments[162](index=162&type=chunk) - The federally declared public health emergency expired on May 11, 2023, discontinuing waivers like 'skilling in place' and phasing out the additional **6.2% FMAP reimbursement**, which may adversely affect operators' finances[163](index=163&type=chunk)[166](index=166&type=chunk) - Average occupancy in facilities has improved since early 2021 but has not returned to pre-pandemic levels, partly due to staffing shortages limiting admissions[165](index=165&type=chunk) [Government Regulation and Reimbursement](index=57&type=section&id=Government%20Regulation%20and%20Reimbursement) This section details the complex regulatory landscape for healthcare operators, highlighting the end of the COVID-19 public health emergency, phase-out of enhanced FMAP, a projected **4.0% net increase** in Medicare payments for FY 2024, and potential new burdens from minimum staffing requirements and proposed REIT ownership disclosure rules - The expiration of the public health emergency on May 11, 2023, ended temporary regulatory waivers, including the suspension of the three-day prior hospital stay requirement for Medicare coverage[174](index=174&type=chunk) - CMS issued a final rule for FY 2024 projecting a net **4.0% ($1.4 billion)** increase in Medicare Part A payments to SNFs, which includes a **6.4% market basket update** offset by a **2.3% PDPM parity adjustment recalibration**[190](index=190&type=chunk) - The Biden Administration is considering implementing federal minimum staffing requirements for nursing homes, which, if unfunded, could have a material adverse impact on operators' financial condition[183](index=183&type=chunk) - CMS proposed a rule in February 2023 that would require SNFs to disclose information about entities like REITs that lease real estate to them, citing concerns about quality of care at facilities owned by investment firms[185](index=185&type=chunk) [Second Quarter of 2023 and Recent Highlights](index=65&type=section&id=Second%20Quarter%20of%202023%20and%20Recent%20Highlights) In Q2 2023, Omega acquired five facilities for **$128.6 million** and sold ten for **$44.7 million**, recording **$21.1 million** in impairments, while financially issuing **6.6 million shares** for **$201.6 million** and receiving a **$92.6 million** cash settlement from swap terminations, amidst ongoing operator issues with LaVie and Maplewood - Acquired **5 facilities for $128.6M** and sold **10 facilities for $44.7M** in net proceeds during Q2 2023[197](index=197&type=chunk) - Issued **6.6 million shares** of common stock under its ATM and DRSPP programs, generating **$201.6 million** in gross proceeds[199](index=199&type=chunk) - Terminated five forward starting swaps, receiving a **$92.6 million** net cash settlement[199](index=199&type=chunk) - Operator Maplewood short-paid rent by **$1.0 million** in both June and July 2023, and operator LaVie short-paid July 2023 rent by **$4.7 million**[203](index=203&type=chunk) [Results of Operations](index=70&type=section&id=Results%20of%20Operations) For Q2 2023, rental income increased by **$7.7 million** and impairments rose to **$21.1 million**, while for the six-month period, rental income decreased by **$20.1 million**, primarily due to lower revenue from cash-basis operators and a **$12.5 million** option termination payment Comparison of Operating Results (in thousands) | Account | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Rental income | $219,101 | $211,428 | $7,673 | | Interest income | $29,232 | $31,374 | $(2,142) | | Impairment on real estate properties | $21,114 | $7,695 | $13,419 | | Gain on assets sold – net | $12,243 | $25,180 | $(12,937) | - The Q2 2023 increase in rental income was driven by a **$9.5M** decrease in straight-line rent write-offs and **$7.1M** from acquisitions, partially offset by a **$12.0M** decrease from cash basis operators[206](index=206&type=chunk) - The six-month decrease in rental income was primarily due to a **$46.3M** net decrease from cash basis operators (including a **$12.5M** termination payment to Maplewood), partially offset by fewer write-offs and acquisition-related income[210](index=210&type=chunk) [Funds from Operations](index=75&type=section&id=Funds%20from%20Operations) Nareit FFO, a key performance measure, was **$155.2 million** for Q2 2023 and **$301.2 million** for the six months ended June 30, 2023, representing decreases from the prior-year periods Nareit FFO Reconciliation (in thousands) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income | $61,521 | $91,915 | $98,366 | $287,071 | | Adjustments (Gains, Depreciation, Impairments) | $93,632 | $68,710 | $202,859 | $44,232 | | **Nareit FFO** | **$155,153** | **$160,625** | **$301,225** | **$331,303** | [Liquidity and Capital Resources](index=76&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, Omega had **$5.3 billion** in total debt (**58.3%** of capitalization, **99%** fixed-rate), **$356.5 million** in cash, and **$1.43 billion** available under its revolving credit facility, having raised **$203.9 million** through equity programs and subsequently repaid **$350 million** in senior notes - As of June 30, 2023, total debt was **$5.3 billion**, with a weighted average annual interest rate of **4.2%**, and **99%** of this debt has fixed interest payments[219](index=219&type=chunk)[220](index=220&type=chunk) - The company had **$1.43 billion** of availability under its revolving credit facility and **$730.5 million** remaining under its ATM Program as of June 30, 2023[221](index=221&type=chunk)[222](index=222&type=chunk)[227](index=227&type=chunk) - On August 1, 2023, the company repaid **$350 million** of 4.375% senior notes using available cash[221](index=221&type=chunk) Cash Flow Summary Comparison (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Operating activities | $281,736 | $305,196 | | Investing activities | $(184,669) | $277,166 | | Financing activities | $(41,685) | $(436,756) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there were no material changes in its primary market risk exposures or the management of those exposures during the quarter ended June 30, 2023, compared to what was disclosed in its 2022 Annual Report on Form 10-K - There were no material changes in the company's primary market risk exposures or how those exposures are managed during the quarter[240](index=240&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting identified during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[243](index=243&type=chunk) - No material changes to the company's internal control over financial reporting were identified during the quarter[244](index=244&type=chunk) PART II - Other Information [Item 1. Legal Proceedings](index=83&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference legal proceedings detailed in Note 18 of the Consolidated Financial Statements, including the settlement of a shareholder class action lawsuit and related ongoing derivative actions - The company refers to Note 18 for details on legal proceedings, which discusses the settlement of a securities class action lawsuit in Q2 2023 and other ongoing litigation[140](index=140&type=chunk)[245](index=245&type=chunk) [Item 1A. Risk Factors](index=83&type=section&id=Item%201A.%20Risk%20Factors) The company reports that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to risk factors were reported since the company's 2022 Annual Report on Form 10-K[246](index=246&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, Omega issued **17,839 common shares** in exchange for Omega OP Units via private placements, while no shares were repurchased under its authorized **$500 million** program - In Q2 2023, the company issued **17,839 shares** of common stock in exchange for an equal number of Omega OP Units[247](index=247&type=chunk) - No shares were repurchased during the second quarter of 2023 under the company's stock repurchase program[249](index=249&type=chunk) [Item 6. Exhibits](index=84&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, CEO and CFO certifications, and the Inline XBRL data files - Exhibits filed include amendments to credit agreements to conform to reference rate reform (SOFR), CEO/CFO certifications, and XBRL data[250](index=250&type=chunk)

Omega Healthcare Investors, Inc. (NYSE:OHI) Q1 2023 Earnings Conference Call May 3, 2023 10:00 AM ET Company Participants Michele Reber - Senior Director, Asset Management Taylor Pickett - Chief Executive Officer Bob Stephenson - Chief Financial Officer Dan Booth - Chief Operating Officer Megan Krull - Senior Vice President, Operations Conference Call Participants Jonathan Hughes - Raymond James Connor Siversky - Wells Fargo Securities Michael Griffin - Citi Steven Valiquette - Barclays Joshua Dennerlein - ...

PART I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q1 2023 show total assets decreased to $9.29 billion, net income significantly fell to $35.9 million, and operating cash flow decreased to $111.4 million [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $9.29 billion as of March 31, 2023, primarily due to reduced real estate assets, while total equity also declined Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$9,290,206** | **$9,405,163** | | Real estate assets – net | $6,438,035 | $6,537,491 | | Cash and cash equivalents | $245,182 | $297,103 | | **Total Liabilities** | **$5,604,595** | **$5,601,881** | | Senior notes and other unsecured borrowings – net | $4,903,377 | $4,900,992 | | **Total Equity** | **$3,685,611** | **$3,803,282** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenues decreased to $218.2 million in Q1 2023, leading to a sharp decline in net income to $35.9 million, primarily due to lower rental income and higher impairment charges Consolidated Statements of Operations Summary (in thousands) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total revenues | $218,202 | $249,315 | | Rental income | $189,077 | $216,883 | | Total expenses | $199,831 | $167,733 | | Impairment on real estate properties | $38,988 | $3,511 | | Gain on assets sold – net | $13,637 | $113,637 | | **Net income available to common stockholders** | **$35,942** | **$189,607** | | **Diluted EPS** | **$0.15** | **$0.79** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $111.4 million in Q1 2023, while investing activities significantly declined and financing activities used $166.4 million Consolidated Statements of Cash Flows Summary (in thousands) | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $111,360 | $132,202 | | Net cash provided by investing activities | $2,657 | $177,338 | | Net cash (used in) provided by financing activities | ($166,422) | $161,237 | | **(Decrease) increase in cash** | **($52,126)** | **$470,370** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail significant events including asset acquisitions, sales, impairments, and ongoing collectibility issues with operators leading to rent deferrals and restructurings - In Q1 2023, the company acquired **6 ALF facilities** in the U.K. for **$26.4 million** with an initial annual cash yield of **8.0%**[27](index=27&type=chunk) - During Q1 2023, the company sold **two facilities** for **$17.6 million** in net cash proceeds, recognizing a net gain of **$13.6 million**, and recorded impairments of approximately **$39.0 million** on four facilities[32](index=32&type=chunk)[35](index=35&type=chunk) - As of March 31, 2023, **17 operators** were on a cash basis for revenue recognition, representing **25.1%** of total revenues for the quarter[42](index=42&type=chunk) - In Q1 2023, the company allowed **eight operators** to defer **$24.4 million** of contractual rent and interest, primarily related to LaVie (**$14.3M**), Healthcare Homes (**$6.1M**), and Agemo (**$1.9M**)[44](index=44&type=chunk) - Subsequent to quarter end, the company committed to a **$222.6 million** investment with an existing operator, including the acquisition of **4 SNFs** and providing **five loans**[141](index=141&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the adverse impact of COVID-19 on operators, leading to collectibility issues and restructurings, with total revenues and Nareit FFO decreasing, while maintaining strong liquidity [Outlook, Trends and Other Conditions](index=47&type=section&id=Outlook%2C%20Trends%20and%20Other%20Conditions) Operators face ongoing challenges from COVID-19, including lower occupancy and labor shortages, with uncertainty regarding future government support post-public health emergency - Operators are significantly impacted by reduced revenue from lower occupancy, increased expenses, and uncertainty around reimbursement levels, especially with the public health emergency ending on **May 11, 2023**[150](index=150&type=chunk) - Staffing shortages continue to impact operators' occupancy levels and profitability, requiring them to limit admissions in some cases[151](index=151&type=chunk)[152](index=152&type=chunk) - The phase-out of the additional **6.2% FMAP** reimbursement in 2023 may adversely affect operators if state rate-setting does not adjust to cover increased costs[153](index=153&type=chunk) [First Quarter of 2023 and Recent Highlights](index=58&type=section&id=First%20Quarter%20of%202023%20and%20Recent%20Highlights) Q1 2023 highlights include facility acquisitions and sales, significant impairments, and ongoing operator distress management through restructurings and lease transitions - Acquired **six facilities** for **$26.4 million** and invested **$10.1 million** in capital improvements[183](index=183&type=chunk) - Sold **two facilities** for **$17.6 million** in net proceeds, resulting in a **$13.6 million** gain, and recorded **$39.0 million** in impairments on four other facilities[184](index=184&type=chunk)[186](index=186&type=chunk) - Managed significant operator collectibility issues, including deferring **$24.4 million** in rent and interest and executing major restructurings with operators Agemo, LaVie, and Maplewood[187](index=187&type=chunk)[188](index=188&type=chunk) [Results of Operations](index=61&type=section&id=Results%20of%20Operations) Q1 2023 saw rental income decrease by $27.8 million due to cash-basis operators, interest income fall, and a significant increase in real estate impairment charges Comparison of Results (in thousands) | Account | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Rental income | $189,077 | $216,883 | $(27,806) | | Interest income | $28,420 | $31,143 | $(2,723) | | Impairment on real estate properties | $38,988 | $3,511 | $35,477 | | (Recovery) provision for credit losses | $(4,057) | $1,824 | $(5,881) | | Gain on assets sold – net | $13,637 | $113,637 | $(100,000) | - The decrease in rental income was primarily driven by a **$45.5 million** net decrease from cash basis operators, including Maplewood and LaVie[190](index=190&type=chunk) [Funds From Operations](index=63&type=section&id=Funds%20From%20Operations) Nareit FFO, a key non-GAAP measure, decreased by **$24.6 million** to **$146.1 million** in Q1 2023, primarily due to lower total revenue from operators Nareit FFO Reconciliation (in thousands) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net income | $36,845 | $195,156 | | Deduct gain from real estate dispositions | (13,637) | (113,637) | | Depreciation and amortization | 81,192 | 82,752 | | Add back impairments on real estate properties | 38,988 | 3,511 | | **Nareit FFO** | **$146,072** | **$170,678** | - The **$24.6 million** decrease in Nareit FFO was primarily driven by the overall decrease in total revenue[198](index=198&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, the company had **$5.3 billion** in total debt, mostly fixed-rate, and strong liquidity with **$245 million** cash and **$1.43 billion** credit facility availability - As of March 31, 2023, total debt was **$5.3 billion**, with **98%** being fixed-rate debt, and a weighted average annual interest rate of **4.1%**[200](index=200&type=chunk)[201](index=201&type=chunk) - The company has **$1.43 billion** of availability under its revolving credit facility and approximately **$245 million** of cash on its balance sheet[202](index=202&type=chunk) - The company anticipates repaying the **$350 million** of **4.375%** senior notes due in August 2023 using available cash and proceeds from its revolving credit facility[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes were reported in the company's primary market risk exposures or their management during Q1 2023 - There were no material changes in the company's primary market risk exposures or how those exposures are managed during the quarter[220](index=220&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[222](index=222&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected or are likely to materially affect internal controls[223](index=223&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a securities class action lawsuit with a **$30.75 million** settlement approved, and ongoing litigation with debt holders regarding offset rights - A settlement of **$30.75 million** for a securities class action lawsuit was approved on **April 25, 2023**, funded by the company's directors and officers insurers[126](index=126&type=chunk) - The company is involved in ongoing litigation with subordinated debt holders related to the former Gulf Coast master lease agreement regarding the exercise of offset rights for unpaid rent[132](index=132&type=chunk)[133](index=133&type=chunk) [Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported from those disclosed in the 2022 Form 10-K - No material changes to risk factors were reported from those disclosed in the 2022 Form 10-K[225](index=225&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2023, the company did not issue common stock for Omega OP Units nor repurchase shares under its authorized stock repurchase program - The company did not repurchase any shares of its outstanding common stock during the first quarter of 2023[228](index=228&type=chunk) [Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and financial statements in Inline XBRL format - The report includes required CEO and CFO certifications (Exhibits **31.1**, **31.2**, **32.1**, **32.2**) and financial statements in Inline XBRL format (Exhibit **101**)[230](index=230&type=chunk)

[PART I](index=4&type=section&id=PART%20I) [Business](index=4&type=section&id=Item%201%20%E2%80%93%20Business) Omega Healthcare Investors, Inc. is a REIT investing in U.S. and U.K. skilled nursing and assisted living facilities, with revenue from leases and loans [Overview](index=4&type=section&id=Overview) - **Omega** is a Real Estate Investment Trust (REIT) structured as an UPREIT, with assets owned and operations conducted through its operating partnership, OHI Healthcare Properties Limited Partnership (Omega OP)[19](index=19&type=chunk) - As of December 31, 2022, the parent company owned approximately **97% of Omega OP Units**, with other investors owning the remaining **3%**[19](index=19&type=chunk) - The company has one reportable segment: investments in healthcare-related real estate properties located in the U.S. and the U.K[20](index=20&type=chunk) [Investment Strategy & Types](index=4&type=section&id=Investment%20Strategy%20%26%20Types) - The company's core business is financing the long-term healthcare industry, focusing on **SNFs and ALFs**, with other property types including ILFs, specialty facilities, and MOBs[21](index=21&type=chunk)[22](index=22&type=chunk) - Investment evaluation criteria include operator quality and creditworthiness, facility cash flow, physical condition, location, and the regulatory environment[22](index=22&type=chunk)[29](index=29&type=chunk) Annualized Yields by Investment Type (as of Dec 31, 2022) | Investment Type | Average Annualized Yield | | :--- | :--- | | Operating Leases | ~9.0% | | Real Estate Loans | ~10.1% | | Non-Real Estate Loans | ~8.7% | [Portfolio and Investment Summary](index=6&type=section&id=Portfolio%20and%20Investment%20Summary) - As of December 31, 2022, the portfolio included **926 healthcare facilities** across **42 states** and the U.K., operated by **67 third-party operators**[33](index=33&type=chunk) Total Investment Assets (in millions USD) | | As of December 31, 2022 | As of December 31, 2021 | | :--- | :--- | :--- | | Total real estate investments | $10,099.9 | $10,618.1 | | Non-real estate loans receivable – net | $225.3 | $124.2 | | **Total investments** | **$10,325.2** | **$10,742.3** | Revenues by Investment Category (in millions USD) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Rental income | $750.2 | $923.7 | $753.4 | | Real estate loans interest income | $110.3 | $123.6 | $117.3 | | **Total revenues** | **$878.2** | **$1,062.8** | **$892.4** | [Government Regulation and Reimbursement](index=10&type=section&id=Government%20Regulation%20and%20Reimbursement) - A significant portion of operators' revenue comes from government-funded programs like **Medicare and Medicaid**, making them vulnerable to reimbursement rate reductions and regulatory changes[47](index=47&type=chunk) - The federally declared public health emergency for COVID-19, providing regulatory waivers and financial support, is scheduled to terminate on **May 11, 2023**, creating uncertainty for operators[45](index=45&type=chunk) - The CARES Act authorized approximately **$178 billion** through the Provider Relief Fund to support healthcare providers during the pandemic, with no additional funding expected[50](index=50&type=chunk) - The full **2% Medicare sequestration**, reducing payments to providers, went back into effect on **July 1, 2022**, and is extended through fiscal year 2031[52](index=52&type=chunk) - For fiscal year 2023, CMS finalized a net Medicare Part A payment increase for SNFs of **2.7%**, or **$904 million**, including a phased-in **4.6%** parity adjustment to the Patient Driven Payment Model (PDPM) for budget neutrality[58](index=58&type=chunk)[59](index=59&type=chunk) [Human Capital Management](index=18&type=section&id=Human%20Capital%20Management) - As of February 1, 2023, the company had **52 employees**, none subject to a collective bargaining agreement[80](index=80&type=chunk) - The company reinforced its commitment to diversity and inclusion by signing the CEO Action for Diversity and Inclusion Pledge and expanding recruitment practices[81](index=81&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) The company faces risks from operator financial health, government reimbursement reliance, COVID-19 impacts, capital dependency, and maintaining REIT tax status [Risks Related to the Operators of Our Facilities](index=19&type=section&id=Risks%20Related%20to%20the%20Operators%20of%20Our%20Facilities) - The company's financial position is highly dependent on operators' ability to meet lease and loan obligations, with bankruptcy or insolvency potentially limiting investment recovery[89](index=89&type=chunk)[90](index=90&type=chunk) - Operators are heavily reliant on **Medicare and Medicaid** reimbursement, and rate reductions could adversely affect their financial condition and payment ability to Omega[97](index=97&type=chunk) - Increased operating costs for operators, particularly **labor shortages and wage increases** exacerbated by the COVID-19 pandemic, may affect their ability to meet obligations[103](index=103&type=chunk) - Inflation could adversely impact operators if operating expense increases exceed reimbursement increases, potentially affecting their ability to pay rent and other obligations[105](index=105&type=chunk) [Risks Related to Us and Our Operations](index=24&type=section&id=Risks%20Related%20to%20Us%20and%20Our%20Operations) - The **COVID-19 pandemic** has materially and adversely affected operators through lower occupancy, increased expenses, and staffing shortages, with the public health emergency termination on **May 11, 2023**, adding uncertainty[111](index=111&type=chunk)[113](index=113&type=chunk) - As a REIT, the company must distribute at least **90% of its taxable income**, requiring reliance on external debt and equity capital for future growth and to meet maturing commitments[119](index=119&type=chunk) - The company's assets are concentrated in the long-term care industry, with largest state concentrations in **Florida (11.5%)**, **Texas (10.3%)**, and **Indiana (6.6%)** as of December 31, 2022[139](index=139&type=chunk) - Investments in the U.K. subject the company to risks including **currency fluctuations (USD vs. GBP)** and changes in foreign political, regulatory, and economic conditions, such as those related to Brexit[137](index=137&type=chunk)[138](index=138&type=chunk) [Risks Related to Taxation](index=31&type=section&id=Risks%20Related%20to%20Taxation) - Failure to qualify as a REIT would subject the company to federal corporate income tax, significantly reducing net earnings and cash flow, and impairing its ability to expand and make distributions[142](index=142&type=chunk)[143](index=143&type=chunk) - To maintain REIT status, the company must distribute at least **90% of its taxable income** annually, potentially requiring asset sales in adverse market conditions or borrowing on unfavorable terms if funds are not readily available[144](index=144&type=chunk) [Properties](index=33&type=section&id=Item%202%20%E2%80%93%20Properties) Omega's real estate portfolio includes 926 facilities across 42 states and the U.K., concentrated in Florida, Texas, and Indiana Top 5 State/Country Concentrations by Gross Investment (as of Dec 31, 2022, in millions USD) | Location | Number of Facilities | Gross Investment | % of Gross Investment | | :--- | :--- | :--- | :--- | | Florida | 98 | $1,104.4 | 11.5% | | Texas | 111 | $987.5 | 10.3% | | Indiana | 70 | $638.3 | 6.6% | | California | 52 | $568.7 | 5.9% | | Ohio | 43 | $541.4 | 5.6% | [Legal Proceedings](index=33&type=section&id=Item%203%20%E2%80%93%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 20—Commitments and Contingencies to the Consolidated Financial Statements - The company refers to Note 20 of its Consolidated Financial Statements for details on legal proceedings[155](index=155&type=chunk) [PART II](index=34&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205%20%E2%80%93%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Omega's common stock trades on NYSE as OHI; in 2022, the company repurchased 5.2 million shares for $142.3 million under a $500 million program - In January 2022, the Board authorized a repurchase program for up to **$500 million** of common stock through March 2025[162](index=162&type=chunk) - During 2022, Omega repurchased **5.2 million shares** of common stock at an average price of **$27.32 per share**, for an aggregate cost of **$142.3 million**[162](index=162&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%207%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses COVID-19's adverse impact on operators, leading to revenue decreases and collectibility issues, offset by portfolio optimization and strong liquidity [Outlook, Trends and Other Conditions](index=36&type=section&id=Outlook%2C%20Trends%20and%20Other%20Conditions) - The **COVID-19 pandemic** continues to significantly impact operators through reduced occupancy, labor shortages, and increased costs, leading to payment failures, deferrals, and restructurings[171](index=171&type=chunk) - Occupancy has improved since early 2021 but has not returned to pre-pandemic levels, partly due to staffing shortages limiting admissions[175](index=175&type=chunk) - The phase-out of the **6.2% FMAP reimbursement** in 2023 and the scheduled expiration of the public health emergency on **May 11, 2023**, create significant uncertainty regarding future government support for operators[176](index=176&type=chunk) [2022 and Recent Highlights](index=40&type=section&id=2022%20and%20Recent%20Highlights) - Acquired **41 facilities** for **$225.2 million** with initial cash yields between **8% and 9.5%**[181](index=181&type=chunk) - Sold **66 facilities** for approximately **$759.0 million** in net cash proceeds, recognizing a net gain of about **$360.0 million**, primarily driven by restructuring transactions with operators like Gulf Coast, Guardian, and Agemo[183](index=183&type=chunk) - Repurchased **5.2 million shares** of common stock for **$142.3 million** at an average price of **$27.32 per share**[183](index=183&type=chunk) - Placed **nine operators** on a cash basis of revenue recognition during 2022, resulting in **$119.8 million** in straight-line accounts receivable write-offs; as of year-end, **20 operators** representing **36.5% of total revenues** were on a cash basis[187](index=187&type=chunk) - Quarterly cash dividends paid during 2022 aggregated to **$2.68 per share**[189](index=189&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) Comparison of Results of Operations (2022 vs 2021, in millions USD) | | 2022 | 2021 | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | **Revenues:** | | | | | Rental income | $750.2 | $923.7 | $(173.5) | | Interest income | $123.9 | $136.4 | $(12.5) | | **Expenses:** | | | | | Depreciation and amortization | $332.4 | $342.0 | $(9.6) | | Provision for credit losses | $68.7 | $77.7 | $(9.1) | | **Other Income (Expense):** | | | | | Gain on assets sold – net | $360.0 | $161.6 | $198.3 | - The decrease in rental income was primarily due to an **$85.7 million** increase in straight-line rent write-offs and a **$67.2 million** net decrease in income from **13 cash basis operators**[192](index=192&type=chunk) - The increase in gain on assets sold was driven by the sale of **66 facilities** in 2022 compared to **48 in 2021**, as part of portfolio optimization efforts[194](index=194&type=chunk) [Funds From Operations](index=45&type=section&id=Funds%20From%20Operations) Nareit FFO Reconciliation (in millions USD) | | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net income | $438.8 | $428.3 | $163.5 | | Nareit FFO | $460.5 | $655.2 | $555.9 | - **Nareit FFO decreased by $194.7 million** in 2022 compared to 2021, primarily driven by the overall decrease in total revenue[202](index=202&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) Capital Structure (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Total Assets | $9.4 billion | | Total Debt | $5.3 billion | | Total Equity | $3.8 billion | | Debt to Total Capitalization | 58.4% | - As of December 31, 2022, **98% of the company's debt** had fixed interest payments, with a weighted-average annual interest rate of **4.1%**[206](index=206&type=chunk) Cash Flow Summary (in millions USD) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $625.7 | $722.1 | | Net cash provided by (used in) investing activities | $442.9 | $(524.2) | | Net cash used in financing activities | $(789.4) | $(341.1) | [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Revenue Recognition: The assessment of placing an operator on a cash basis for revenue recognition is a critical estimate, leading to approximately **$119.8 million** in receivables and lease inducements write-offs in 2022[226](index=226&type=chunk) - Real Estate Investment Impairment: Assessing impairment involves significant judgment; in 2022, the company recorded impairments of approximately **$38.5 million** on **22 facilities**[226](index=226&type=chunk) - Allowance for Credit Losses: The company uses a probability of default (PD) and loss given default (LGD) methodology, recording a provision for credit losses of approximately **$68.7 million** in 2022[227](index=227&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Omega is exposed to market risks from interest rate and foreign currency fluctuations, mitigated by fixed-rate debt and derivatives, with a 1% interest rate increase impacting fixed-rate debt by $212.0 million - A **one percent increase in interest rates** would decrease the fair value of long-term fixed-rate borrowings by approximately **$212.0 million** at December 31, 2022[230](index=230&type=chunk) - The company is exposed to foreign currency risk through its U.K. investments; a **10% change in the GBP/USD exchange rate** would impact net income from consolidated U.K. investments by approximately **$1.4 million** based on 2022 results[232](index=232&type=chunk) - To hedge its U.K. net investments, the company holds **six foreign currency forward contracts** with notional amounts totaling **£250.0 million** as of December 31, 2022[233](index=233&type=chunk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208%20%E2%80%93%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's consolidated financial statements for fiscal year 2022, including key statements, accompanying notes, and the independent auditor's report - The consolidated financial statements and the report of Ernst & Young LLP, Independent Registered Public Accounting Firm, are filed as part of this report[234](index=234&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%209A%20%E2%80%93%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, affirmed by an unqualified auditor opinion - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[236](index=236&type=chunk) - Management assessed internal control over financial reporting using the COSO framework and concluded it was effective as of December 31, 2022[239](index=239&type=chunk) [PART III](index=56&type=section&id=PART%20III) [Directors, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=56&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information required for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, security ownership, related transactions, and principal accountant fees, is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's 2023 proxy statement[245](index=245&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk) [PART IV](index=57&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=57&type=section&id=Item%2015%20%E2%80%93%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements, schedules, and exhibits filed with the Form 10-K, including auditor reports and real estate schedules - This section contains the listing of all financial statements, schedules, and exhibits filed with the annual report[255](index=255&type=chunk)[256](index=256&type=chunk)

Omega Healthcare Investors, Inc. (NYSE:OHI) Q4 2022 Earnings Conference Call February 3, 2023 10:00 AM ET Company Participants Michele Reber - Senior Director, Asset Management Taylor Pickett - Chief Executive Officer Dan Booth - Chief Operating Officer Bob Stephenson - Chief Financial Officer Megan Krull - Senior Vice President, Operations Conference Call Participants Jonathan Hughes - Raymond James Michael Griffin - Citi Steven Valiquette - Barclays Joshua Dennerlein - Bank of America Georgi Dinkov - Mizu ...

Omega Healthcare Investors, Inc. (NYSE:OHI) Q3 2022 Earnings Conference Call November 3, 2022 10:00 AM ET Company Participants Michele Reber - Senior Director of Asset Management Taylor Pickett - Chief Executive Officer Robert Stephenson - Chief Financial Officer Daniel Booth - Chief Operating Officer Megan Krull - Senior Vice President of Operations Conference Call Participants Jonathan Hughes - Raymond James John Pawlowski - Green Street Advisors, LLC Michael Griffin - Citigroup Inc. David Rodgers - Rober ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OMEGA HEALTHCARE INVESTORS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

Omega Healthcare Investors, Inc. (NYSE:OHI) Q2 2022 Results Conference Call August 2, 2022 10:00 AM ET Company Participants Michele Reber - Senior Director, Asset Management Taylor Pickett - Chief Executive Officer Dan Booth - Chief Operating Officer Bob Stephenson - Chief Financial Officer Megan Krull - Senior Vice President, Operations Conference Call Participants Connor Siversky - Berenberg Jonathan Hughes - Raymond James Dave Rodgers - Baird Michael Griffin - Citi Daniel Bernstein - Capital One Nick Yul ...