Omega Healthcare Investors(OHI) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Presents Omega's unaudited consolidated financial statements for Q2 2025, including balance sheets, operations, comprehensive income, equity, cash flows, and detailed notes Consolidated Balance Sheets Snapshot of Omega's financial position as of June 30, 2025, showing increased total assets and equity compared to Dec 31, 2024 Consolidated Balance Sheet Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total assets | $10,546,476 | $9,897,891 | | Total liabilities | $5,357,469 | $5,167,052 | | Total equity | $5,189,007 | $4,730,839 | - Total assets increased by $648.6 million (6.55%) from December 31, 2024, to June 30, 2025, primarily driven by increases in real estate assets and cash[10] - Total equity increased by $458.1 million (9.68%) over the same period[10] Consolidated Statements of Operations Details Omega's revenues, expenses, net income, and EPS for Q2 2025 and 2024, reflecting significant net income growth Consolidated Statements of Operations Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total revenues | $282,506 | $252,745 | $559,291 | $496,044 | | Total expenses | $171,949 | $149,888 | $347,263 | $323,960 | | Net income | $140,479 | $117,079 | $252,539 | $186,425 | | Net income available to common stockholders | $136,599 | $113,862 | $245,631 | $181,223 | | Basic EPS | $0.46 | $0.46 | $0.80 | $0.73 | | Diluted EPS | $0.46 | $0.45 | $0.79 | $0.72 | - Net income increased by 20.0% for the three months ended June 30, 2025, and by 35.5% for the six months ended June 30, 2025, compared to the respective prior-year periods[12] - Basic EPS remained flat at $0.46 for the three months ended June 30, 2025, but increased to $0.80 for the six months ended June 30, 2025, from $0.73 in the prior year[12] Consolidated Statements of Comprehensive Income Shows net income adjusted for other comprehensive income (loss) items, indicating a substantial increase in comprehensive income Consolidated Statements of Comprehensive Income Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $140,479 | $117,079 | $252,539 | $186,425 | | Total other comprehensive income | $55,844 | $2,569 | $76,254 | $5,158 | | Comprehensive income attributable to common stockholders | $190,847 | $116,355 | $319,714 | $186,230 | - Total other comprehensive income saw a significant increase, primarily due to foreign currency translation gains of $58.2 million and $83.6 million for the three and six months ended June 30, 2025, respectively[13] Consolidated Statements of Equity Presents changes in stockholders' equity and noncontrolling interest for Q2 2025 and 2024, reflecting stock issuance, dividends, and net income Consolidated Statements of Equity Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' equity | $4,988,297 | $4,536,673 | | Total equity | $5,189,007 | $4,730,839 | - Issuance of common stock generated $257.1 million and $517.9 million in additional paid-in capital for the three and six months ended June 30, 2025, respectively[16][18] - Common dividends declared were $194.6 million ($0.67 per share) for the three months and $383.9 million ($1.34 per share) for the six months ended June 30, 2025[16][18] Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities for H1 2025 and 2024, showing increased cash from operating and financing Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------- | :------------------------------------------ | :------------------------------------------ | | Operating activities | $421,217 | $335,577 | | Investing activities | $(444,286) | $(255,972) | | Financing activities | $241,257 | $(485,221) | | Cash, cash equivalents and restricted cash at end of period | $772,584 | $39,131 | - Net cash provided by operating activities increased by $85.6 million (25.5%) year-over-year[19] - Net cash used in investing activities increased by $188.3 million (73.6%) due to higher real estate acquisitions[19] - Net cash provided by financing activities significantly improved from a net use of $485.2 million in 2024 to a net provision of $241.3 million in 2025, a change of $726.5 million[19] Notes to Consolidated Financial Statements Detailed disclosures on Omega's financial statements, covering operations, accounting policies, assets, liabilities, equity, and risk management NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Outlines Omega's REIT business in healthcare real estate (US/UK), financial statement preparation, consolidation, and new accounting pronouncements - Omega Healthcare Investors, Inc. operates as a REIT, focusing on financing and capital for the long-term healthcare industry, with a core portfolio of triple net leases and real estate loans[21] - The Company is structured as an UPREIT, with the Parent owning 97% of Omega OP Units as of June 30, 2025[22] - The financial statements are unaudited and prepared in accordance with Form 10-Q, consolidating wholly-owned subsidiaries and controlled joint ventures/VIEs[23] - The Company is evaluating the impact of new FASB ASUs 2024-03 (Expense Disaggregation) and 2023-09 (Income Tax Disclosures), effective for annual periods beginning after December 15, 2026, and December 15, 2024, respectively[25][26] NOTE 2 – REAL ESTATE ASSETS Details Omega's real estate portfolio, rental income, asset acquisitions, construction in progress, and direct financing leases - As of June 30, 2025, the portfolio includes 577 SNFs, 342 ALFs, 19 ILFs, 18 specialty facilities, and one medical office building[27] Rental Income by Type | Rental Income Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Fixed income from operating leases | $235,596 | $210,554 | $463,791 | $413,846 | | Variable income from operating leases | $3,606 | $3,510 | $7,409 | $6,887 | | Interest income from direct financing leases | $— | $251 | $180 | $503 | | Total rental income | $239,202 | $214,315 | $471,380 | $421,236 | Real Estate Assets Acquired | Period | SNF | ALF | Total Real Estate Assets Acquired (in millions) | Initial Annual Cash Yield | | :----- | :-- | :-- | :-------------------------------------------- | :------------------------ | | Q1 2025 | — | 2 | $10.6 | 9.9% | | Q1 2025 | — | 4 | $47.7 | 10.0% | | Q2 2025 | — | 45 | $344.2 | 10.0% | | Q2 2025 | — | 1 | $11.6 | 10.0% | | Q2 2025 | — | 2 | $32.0 | 10.0% | | Q2 2025 | — | 1 | $8.5 | 10.0% | | Q2 2025 | 8 | — | $105.8 | 10.0% | | Total | 8 | 55 | $560.4 | | - Investments in construction in progress and capital improvement programs totaled $62.7 million for the six months ended June 30, 2025, compared to $56.2 million in the prior year[31] - A $201.8 million ALF project (Inspir Embassy Row) was completed and placed into service in February 2025, generating $5.3 million in rental income for the six months ended June 30, 2025[33] - A direct financing lease with a net investment of $9.5 million was terminated in Q1 2025 and reclassified to real estate assets, with a $10.0 million lease inducement immediately expensed[34] NOTE 3 – ASSETS HELD FOR SALE, DISPOSITIONS AND IMPAIRMENTS Details Omega's assets held for sale, completed dispositions, unrecognized sales, and real estate impairment charges Assets Held for Sale | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Number of facilities held for sale | 2 | 12 | | Amount of assets held for sale | $12,358 | $56,194 | - During the six months ended June 30, 2025, Omega sold 34 facilities for $183.0 million in net cash proceeds, recognizing a net gain of $33.0 million[37] - Real estate impairments totaled $15.4 million for the six months ended June 30, 2025, affecting four facilities, compared to $13.5 million for seven facilities in the prior year[40][41] - Three facility sales, totaling $19.7 million in net real estate assets, remained unrecognized as of June 30, 2025, due to not meeting contract criteria[39] NOTE 4 – CONTRACTUAL RECEIVABLES AND OTHER RECEIVABLES AND LEASE INDUCEMENTS Breaks down receivables and lease inducements, discusses cash basis revenue, rent deferrals, collateral, and operator collectibility issues Receivables and Lease Inducements | Receivable Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------ | :----------------------------- | :----------------------------- | | Contractual receivables – net | $11,552 | $12,611 | | Effective yield interest receivables | $2,099 | $1,839 | | Straight-line rent receivables | $246,458 | $238,690 | | Lease inducements | $8,576 | $8,788 | - Two new operators and one existing operator were placed on a cash basis of revenue recognition during the six months ended June 30, 2025, resulting in a $15.5 million write-off of straight-line rent receivable for the existing operator[45] - As of June 30, 2025, 22 operators are on a cash basis for revenue recognition, representing 17.5% of total revenues for the six months ended June 30, 2025[48] - Maplewood short-paid contractual rent and interest by $1.8 million in July 2025, and its secured revolving credit facility remains on non-accrual status[52][54] - LaVie's master lease was assumed by Avardis effective June 1, 2025, with Avardis paying full contractual rent of $3.1 million in June and July 2025[57][58] - Genesis Healthcare, Inc. filed for Chapter 11 bankruptcy in July 2025; Omega committed up to $8.0 million in DIP financing, requiring Genesis to pay full contractual rent[62] NOTE 5 – REAL ESTATE LOANS RECEIVABLE Details Omega's real estate loans receivable, including mortgage notes and other real estate loans, their interest rates, maturities, and an update on the Maplewood Revolving Credit Facility - As of June 30, 2025, real estate loans receivable – net totaled $1,416.8 million, consisting of 23 fixed-rate mortgage notes on 97 facilities and 20 other real estate loans[63][64] Real Estate Loans Receivable Summary | Loan Type | Weighted Average Interest Rate | Weighted Average Years to Maturity | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Mortgage notes receivable – net | 11.0% | 4.1 | $932,532 | $942,765 | | Other real estate loans – net | 9.1% | 6.9 | $484,288 | $485,533 | | Total real estate loans receivable – net | | | $1,416,820 | $1,428,298 | Real Estate Loans Interest Income | Interest Income Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Mortgage notes – interest income | $25,520 | $21,651 | $51,525 | $41,494 | | Other real estate loans – interest income | $7,455 | $9,307 | $14,612 | $18,203 | | Total real estate loans interest income | $32,975 | $30,958 | $66,137 | $59,697 | - The Maplewood Revolving Credit Facility ($320 million notional) is on non-accrual status due to liquidity issues, with Maplewood failing to make required cash interest payments[69] NOTE 6 – NON-REAL ESTATE LOANS RECEIVABLE Outlines Omega's non-real estate loans (working capital, other loans) and updates on Genesis loans, including new DIP financing - As of June 30, 2025, Omega had 46 non-real estate loans with 32 different borrowers, totaling $333.3 million net[71] Non-Real Estate Loans Receivable Summary | Loan Type | Weighted Average Interest Rate | Weighted Average Years to Maturity | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Working capital loans receivable | 9.5% | 0.9 | $60,766 | $57,071 | | Other loans receivable | 10.2% | 3.8 | $379,695 | $397,998 | | Total non-real estate loans receivable – net | | | $333,340 | $332,274 | - Non-real estate loans generated $20.0 million in interest income for the six months ended June 30, 2025, up from $14.2 million in the prior year[73] - Omega committed up to $8.0 million of a $30.0 million junior secured DIP financing to Genesis in July 2025, bearing 15.0% PIK interest, to support its operations during Chapter 11 bankruptcy[77] NOTE 7 – ALLOWANCE FOR CREDIT LOSSES Provides a rollforward of the allowance for credit losses for real estate and non-real estate loans, detailing write-offs and recoveries Allowance for Credit Losses Rollforward | Financial Statement Line Item | Allowance for Credit Loss as of Dec 31, 2024 (in thousands) | Provision (Recovery) for Credit Loss for the six months ended June 30, 2025 (in thousands) | Write-offs charged against allowance for the six months ended June 30, 2025 (in thousands) | Allowance for Credit Loss as of June 30, 2025 (in thousands) | | :---------------------------- | :---------------------------------------- | :----------------------------------------------------------------------- | :----------------------------------------------------------------------- | :---------------------------------------- | | Real estate loans receivable | $71,249 | $1,028 | $— | $72,277 | | Non-real estate loans receivable | $122,795 | $2,177 | $(17,851) | $107,121 | | Total | $198,612 | $2,273 | $(17,851) | $181,429 | - The total allowance for credit losses decreased from $198.6 million at December 31, 2024, to $181.4 million at June 30, 2025, primarily due to write-offs related to the LaVie plan of reorganization[78][81] - During the six months ended June 30, 2025, Omega received $2.0 million in credit loss recoveries from previously written-off loans[78] NOTE 8 – VARIABLE INTEREST ENTITIES Distinguishes unconsolidated and consolidated VIEs, detailing Omega's maximum loss exposure and financial impact - Omega holds variable interests in several unconsolidated VIEs, with a maximum exposure to loss of $331.2 million as of June 30, 2025[90] Unconsolidated VIEs Financial Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Total assets of unconsolidated VIEs | $1,659,352 | $1,834,929 | | Total liabilities of unconsolidated VIEs | $(50,880) | $(52,692) | | Total collateral | $(1,277,290) | $(1,470,096) | | Maximum exposure to loss | $331,182 | $312,141 | - Revenues from unconsolidated VIE operators totaled $79.2 million for the six months ended June 30, 2025, an increase from $52.3 million in the prior year[93] - Omega consolidates Omega OP and one other joint venture, which had $23.8 million in total assets as of June 30, 2025[94][95] NOTE 9 – INVESTMENTS IN JOINT VENTURES Summarizes Omega's investments in unconsolidated joint ventures, detailing ownership, facility types, and carrying amounts Investments in Joint Ventures Summary | Entity | Ownership % | Facility Type | Facility Count | Carrying Amount June 30, 2025 (in thousands) | Carrying Amount December 31, 2024 (in thousands) | | :-------------------------------- | :---------- | :------------ | :------------- | :------------------------------------------- | :------------------------------------------- | | Lakeway Realty, L.L.C. | 51% | Specialty facility | 1 | $65,979 | $67,541 | | Second Spring Healthcare Investment | 15% | N/A | — | $7,320 | $7,117 | | Other Real Estate JVs | 20% – 50% | Various | 6 | $4,488 | $6,736 | | Other Healthcare JVs | 9% – 25% | N/A | N/A | $7,642 | $7,317 | | Total | | | | $85,429 | $88,711 | - As of June 30, 2025, Omega had $18.5 million in loans outstanding with these joint ventures[97] NOTE 10 – GOODWILL AND OTHER INTANGIBLES Summarizes Omega's goodwill, intangible assets/liabilities, including above/below market leases, and their amortization Goodwill and Other Intangibles Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Goodwill | $644,888 | $643,664 | | Net above market leases | $29,155 | $28,064 | | Net below market leases | $6,867 | $8,076 | - Goodwill increased by $1.2 million due to foreign currency translation[98] - Net amortization related to intangibles was $(0.8) million for the six months ended June 30, 2025, compared to $1.1 million in the prior year[99] NOTE 11 – CONCENTRATION OF RISK Details Omega's concentration of risk by operator and geographic location, highlighting significant real estate investment exposures - As of June 30, 2025, Omega's portfolio included 1,056 healthcare facilities across 42 states, Washington D.C., the U.K., and Jersey, operated by 94 third-party operators, with total investments of $10.6 billion[100] - Maplewood represented 6.6% of total revenues for the six months ended June 30, 2025, and CommuniCare Health Services, Inc. represented 10.9% of total revenues for the same period[101] - The top three geographic concentrations for real estate assets and mortgages were the U.K. (17.8%), Texas (8.9%), and Indiana (5.9%)[102] NOTE 12 – STOCKHOLDERS' EQUITY Covers changes in stockholders' equity, including authorized stock, dividends, equity issuance programs, and comprehensive income - Omega increased its authorized common stock from 350.0 million to 700.0 million shares on June 6, 2025[103] - The Company declared cash dividends of $0.67 per common share for February, May, and August 2025[105] Equity Issuance Programs | Program | Period Ended | Shares Issued (in thousands) | Gross Proceeds (in thousands) | | :------------------------------------------ | :----------- | :--------------------------- | :---------------------------- | | Dividend Reinvestment and Common Stock Purchase Plan | June 30, 2025 | 6,655 | $250,193 | | At-The-Market Offering Program | June 30, 2025 | 7,285 | $272,321 | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------------------- | :--------------------------- | :------------------------------- | | Foreign currency translation | $41,674 | $(66,110) | | Derivative instruments designated as cash flow hedges | $69,392 | $76,713 | | Derivative instruments designated as net investment hedges | $(12,311) | $11,898 | | Total accumulated other comprehensive income for Omega | $96,814 | $22,731 | NOTE 13 – TAXES Details Omega's REIT tax status, TRS taxation, and income tax provision, primarily driven by foreign income - Omega operates as a REIT for federal income tax purposes, with domestic TRSs subject to federal, state, and local income taxes, and foreign subsidiaries subject to foreign income and withholding taxes[111][112] Income Tax Expense | Tax Expense Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Federal, state and local income tax expense | $173 | $181 | $441 | $699 | | Foreign tax expense | $4,355 | $1,799 | $7,698 | $3,862 | | Total income tax expense | $4,528 | $1,980 | $8,139 | $4,561 | - The increase in income tax expense for both periods was primarily due to increased taxable income in the U.K. from acquisitions[114] NOTE 14 – STOCK-BASED COMPENSATION Details stock-based compensation expense, RSU/PIU grants, and leadership transition impact on compensation Stock-Based Compensation Expense | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Stock-based compensation expense | $9,234 | $9,188 | $25,046 | $18,415 | - Stock-based compensation expense for the six months ended June 30, 2025, includes $6.6 million of incremental non-cash expense related to the Chief Operating Officer's leadership transition[116][120] - During Q1 2025, Omega granted 3,065 time-based RSUs and 215,606 time-based PIUs, and 1,832,700 performance-based PIUs and 91,605 performance-based RSUs[116][117][118] NOTE 15 – BORROWING ACTIVITIES AND ARRANGEMENTS Summarizes Omega's secured/unsecured borrowings, including interest rates, maturities, and recent financing activities Borrowings Summary | Borrowing Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Total secured borrowings | $260,942 | $243,310 | | Total senior notes and other unsecured borrowings – net | $4,739,491 | $4,595,549 | | Total secured and unsecured borrowings – net | $5,000,433 | $4,838,859 | - On June 20, 2025, Omega issued $600 million of 5.200% Senior Notes due 2030[129] - The $1.45 billion Revolving Credit Facility's maturity was extended to October 30, 2025, and the 2025 Term Loan's maturity was extended to August 8, 2026[124][126] - Omega repaid the $50 million OP Term Loan on April 29, 2025, and $400 million of 4.50% senior notes in January 2025[125][127] NOTE 16 – DERIVATIVES AND HEDGING Describes Omega's use of derivatives (swaps, caps, forwards) to manage interest rate and foreign currency risks, detailing fair values and hedging - As of June 30, 2025, Omega had 11 interest rate swaps ($428.5 million notional), four interest rate caps (£190.0 million notional), and 11 foreign currency forward contracts (£258.0 million notional) for hedging purposes[131] - A $50.0 million notional interest rate swap was terminated in Q2 2025, resulting in a $0.5 million payment to the counterparty[132] - The $600 million 2030 Senior Notes issuance in June 2025 qualified for amortization of $51.4 million in gains from previously terminated forward swaps, reducing interest expense[133] - A GBP/USD currency forward contract related to a U.K. acquisition was settled in April 2025, resulting in a $5.2 million gain recorded in other income – net[136] NOTE 17 – FINANCIAL INSTRUMENTS Provides net carrying amounts and fair values of Omega's financial instruments, including loans and debt, and fair value methodologies Financial Instruments Carrying Amount and Fair Value | Financial Instrument | Carrying Amount June 30, 2025 (in thousands) | Fair Value June 30, 2025 (in thousands) | Carrying Amount December 31, 2024 (in thousands) | Fair Value December 31, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------- | :-------------------------------------- | :------------------------------------------- | :-------------------------------------- | | Real estate loans receivable – net | $1,416,820 | $1,440,769 | $1,428,298 | $1,447,262 | | Non-real estate loans receivable – net | $333,340 | $338,042 | $332,274 | $340,025 | | Total Assets | $1,750,160 | $1,778,811 | $1,770,025 | $1,796,740 | | Total Liabilities | $5,000,433 | $4,870,514 | $4,838,859 | $4,627,104 | - Fair values for real estate and non-real estate loans are estimated using discounted cash flow analysis (Level 3 inputs)[141] - Fair values of senior unsecured notes are estimated based on publicly available trading prices (Level 1 inputs)[141] NOTE 18 – COMMITMENTS AND CONTINGENCIES Details Omega's legal proceedings (Gulf Coast debt), indemnification agreements, and future funding commitments for construction and loans - Omega is involved in litigation concerning Gulf Coast Subordinated Debt, with a lawsuit filed in Delaware Superior Court stayed pending Maryland litigation appeal[139][140] - Maximum funding commitment under indemnification agreements was $8.4 million as of June 30, 2025[143] Remaining Commitments | Commitment Type | Remaining Commitments June 30, 2025 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | | Lessor construction and capital commitments under lease agreements | $228,711 | | Non-real estate loan commitments | $60,701 | | Real estate loan commitments | $37,914 | | Total remaining commitments | $327,326 | NOTE 19 – EARNINGS PER SHARE Provides computation of basic and diluted earnings per share, including adjustments for non-controlling interests and dilutive securities Earnings Per Share Computation | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income available to common stockholders – basic | $134,501 (in thousands) | $113,862 (in thousands) | $230,348 (in thousands) | $181,223 (in thousands) | | Denominator for basic earnings per share | 291,188 (in thousands) | 249,366 (in thousands) | 287,101 (in thousands) | 247,719 (in thousands) | | Earnings per share – basic | $0.46 | $0.46 | $0.80 | $0.73 | | Earnings per share – diluted | $0.46 | $0.45 | $0.79 | $0.72 | - Diluted EPS for the six months ended June 30, 2025, increased to $0.79 from $0.72 in the prior year[145] NOTE 20 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS Supplemental disclosures to cash flow statements, including reconciliation of cash/equivalents/restricted cash, and details on interest/taxes paid Supplemental Cash Flow Disclosures | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Cash, cash equivalents and restricted cash at end of period | $772,584 | $39,131 | | Interest paid during the period, net of amounts capitalized | $112,657 | $115,168 | | Taxes paid during the period | $1,716 | $1,433 | - Cash, cash equivalents, and restricted cash significantly increased to $772.6 million at June 30, 2025, from $39.1 million in the prior year[147] NOTE 21 – SEGMENTS Omega operates as a single business segment, with the CEO evaluating performance based on net income and managing interest expense - Omega operates as one business segment, with the CEO (CODM) evaluating performance based on net income and managing interest expense[148][149] Interest Expense by Period | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Interest expense | $51,881 | $50,604 | $102,781 | $104,748 | | Interest expense – net | $52,897 | $53,966 | $105,177 | $111,786 | NOTE 22 – SUBSEQUENT EVENTS Discloses subsequent events, specifically the funding of new mortgage loans in July 2025 - In July 2025, Omega funded three mortgage loans totaling $75.6 million, bearing 10% interest per annum and maturing in July 2027[150] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's perspective on Omega's financial condition, operations, and liquidity, discussing trends, regulatory impacts, and performance Forward-Looking Statements and Factors Affecting Future Results Cautions on forward-looking statements and lists factors that could cause actual results to differ, including operator uncertainties and regulations - The discussion contains forward-looking statements based on current information, subject to various risks and uncertainties[153] - Key risk factors include operator business operations (reimbursement, regulatory matters, occupancy), recovery from staffing shortages and increased costs, changes in healthcare regulations (Medicaid/Medicare), operator bankruptcies, and availability/cost of capital[154] Summary Overview of Omega's REIT business in US/UK healthcare real estate, primarily SNFs and ALFs, and MD&A structure - Omega Healthcare Investors, Inc. operates as a REIT, investing in healthcare-related real estate properties in the U.S. and U.K., primarily SNFs and ALFs[155][156] - The Company's core portfolio consists of long-term leases and real estate loans with healthcare operating companies[156] Outlook, Trends and Other Conditions Discusses long-term care industry recovery from COVID-19, highlighting challenges like labor shortages, inflation, and regulatory uncertainties - The industry continues to recover from COVID-19 impacts, but operators still face labor shortages, staffing expense increases, and inflation-related cost increases[158] - Uncertainty remains regarding whether reimbursement increases will offset incremental costs and lost revenues, and the impact of potential regulatory changes like the OBBBA[158] - Several operators have failed to make contractual payments, leading to deferrals, restructurings, or application of collateral[159] Government Regulation and Reimbursement Details evolving regulatory landscape for US/UK operators, including Medicare/Medicaid changes, quality initiatives, and SNF ownership scrutiny - The healthcare industry is heavily regulated, with frequent and substantial changes in federal, state, and local laws impacting operators' financial conditions[161] - The OBBBA, enacted in July 2025, includes estimated $920 billion in Medicaid cuts over the next decade and a ten-year delay on federal nursing home minimum staffing requirements[163] - CMS's final rule on minimum staffing requirements for SNFs, initially slated for staggered implementation, has been delayed by the OBBBA[167] - New CMS rules require SNFs to disclose ownership and managerial information, delayed until January 1, 2026, amidst concerns about private equity and REIT investments in healthcare[169] - Medicare Part A payments are projected to increase by $1.16 billion (3.2%) for fiscal year 2026, but a 4% reduction in Medicare reimbursement rates is required starting in 2026 due to the Budget Control Act of 2011 and OBBBA[173][175] Second Quarter of 2025 and Recent Highlights Summarizes Omega's Q2 2025 key activities and financial performance, including investments, dispositions, financing, and operator collectibility Investments Omega's Q2 2025 investment activities included facility acquisitions, construction in progress, and new real estate loan originations - Acquired 57 facilities for $502.1 million in Q2 2025, and 63 facilities for $560.4 million for the six months ended June 30, 2025, with initial cash yields between 9.9% and 10.0%[182] - Invested $62.7 million in construction in progress and capital improvement programs for the six months ended June 30, 2025[182] - Funded $45.7 million under 14 new real estate loans during the six months ended June 30, 2025, with weighted average interest rates of 10.3%[182] Dispositions and Impairments Highlights Omega's asset sales and impairment charges during Q2 2025 - Sold 34 facilities for $183.0 million in net cash proceeds during the six months ended June 30, 2025, recognizing net gains of $33.0 million[182] - Recorded impairments of $15.4 million on four facilities during the six months ended June 30, 2025, with $6.3 million related to facilities held for sale[182] Financing Activities Omega's financing activities included increasing authorized common stock, issuing senior notes, and extending credit facility maturities - Increased authorized common stock from 350.0 million to 700.0 million shares on June 6, 2025[182] - Issued $600 million of 5.200% Senior Notes due 2030 on June 20, 2025[185] - Extended the maturity of the $1.45 billion Revolving Credit Facility to October 30, 2025, and the 2025 Term Loan to August 8, 2026[185] - Repaid the $50 million OP Term Loan on April 29, 2025[185] Other Highlights Covers other significant financial activities, including non-real estate loan originations and repayments - Funded $3.9 million under four new non-real estate loans and advanced $24.6 million under existing non-real estate loans during the six months ended June 30, 2025[183] - Received $28.6 million in principal repayments on non-real estate loans during the six months ended June 30, 2025[183] Collectibility Issues Details significant collectibility challenges with key operators, including cash basis, rent shortfalls, and bankruptcy proceedings - Placed two new and one existing operator on a cash basis of revenue recognition, resulting in a $15.5 million straight-line rent receivable write-off for the existing operator[186] - Maplewood short-paid contractual rent by $6.6 million and interest by $5.4 million for the six months ended June 30, 2025, and its secured revolving credit facility is on non-accrual status[186] - LaVie's master lease was assumed by Avardis effective June 1, 2025, following a Chapter 11 reorganization plan, with Avardis making full contractual rent payments[189] - Genesis Healthcare, Inc. filed for Chapter 11 bankruptcy in July 2025; Omega committed up to $8.0 million in DIP financing, requiring Genesis to pay full contractual rent[189] Dividends The Board of Directors declared a cash dividend of $0.67 per share for August 2025 - The Board of Directors declared a cash dividend of $0.67 per share, payable on August 15, 2025[188] Results of Operations Detailed comparison of Omega's consolidated results of operations for Q2 and H1 2025 vs 2024, analyzing revenues, expenses, and other items Results of Operations Summary (Three Months) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Variance (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :---------------------- | | Rental income | $239,202 | $214,315 | $24,887 | | Interest income | $42,997 | $38,042 | $4,955 | | Depreciation and amortization | $80,509 | $74,234 | $6,275 | | General and administrative | $23,838 | $22,148 | $1,690 | | Impairment on real estate properties | $14,215 | $8,182 | $6,033 | | (Recovery) provision for credit losses | $(4,771) | $(14,172) | $9,401 | | Interest expense | $52,897 | $53,966 | $(1,069) | | Other income – net | $13,751 | $3,363 | $10,388 | | Gain on assets sold – net | $22,886 | $12,911 | $9,975 | | Income tax expense | $(4,528) | $(1,980) | $(2,548) | Results of Operations Summary (Six Months) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Variance (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | :---------------------- | | Rental income | $471,380 | $421,236 | $50,144 | | Interest income | $86,113 | $73,878 | $12,235 | | Depreciation and amortization | $160,384 | $148,791 | $11,593 | | General and administrative | $55,895 | $43,680 | $12,215 | | Impairment on real estate properties | $15,450 | $13,474 | $1,976 | | (Recovery) provision for credit losses | $321 | $(5,702) | $6,023 | | Interest expense | $105,177 | $111,786 | $(6,609) | | Other income – net | $16,798 | $8,639 | $8,159 | | Gain on assets sold – net | $32,961 | $11,520 | $21,441 | | Income tax expense | $(8,139) | $(4,561) | $(3,578) | Three Months Ended June 30, 2025 and 2024 Q2 2025 saw increased rental income from acquisitions and cash basis operators, higher interest income, and mixed expense changes - Rental income increased by $24.9 million, driven by facility acquisitions ($31.5 million), higher cash rent from cash basis operators ($8.1 million), and U.K. lease income ($2.8 million), partially offset by $17.5 million in straight-line receivable write-offs[193] - Interest income increased by $5.0 million, primarily from new and existing loan fundings ($8.8 million), partially offset by principal repayments and non-accrual loans[193] - Depreciation and amortization expense increased by $6.3 million due to facility acquisitions and capital additions[192] - Other income – net increased by $10.4 million, mainly from higher interest income on short-term investments and foreign currency/financial instrument gains[195] Six Months Ended June 30, 2025 and 2024 H1 2025 rental income grew from acquisitions and cash basis operators, interest income increased, G&A and depreciation rose, and interest expense decreased - Rental income increased by $50.1 million, primarily from facility acquisitions ($55.6 million), higher cash rent from cash basis operators ($17.9 million), and U.K. lease income ($3.2 million), partially offset by $17.5 million in straight-line receivable write-offs and a $10.0 million lease inducement[197] - Interest income increased by $12.2 million, mainly from new and existing loan fundings ($19.5 million), partially offset by principal repayments and non-accrual loans[200] - General and administrative (G&A) expense increased by $12.2 million, including $6.6 million of non-cash stock-based compensation and $2.2 million of payroll expense related to the former COO's termination[202] - Interest expense decreased by $6.6 million due to repayments of senior notes and term loans, partially offset by new debt issuances and assumed mortgage loans[202] - Gain on assets sold – net increased by $21.4 million due to the sale of 34 facilities in 2025 compared to nine in 2024[201] Funds from Operations Presents Nareit FFO, a non-GAAP measure, as a key operating performance indicator, showing significant increase for reported periods - Nareit FFO is used as a supplemental measure of operating performance, adjusting net income for asset dispositions, depreciation, amortization, and impairment on real estate assets[204][205] Nareit FFO Summary | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $140,479 | $117,079 | $252,539 | $186,425 | | Nareit FFO | $213,473 | $189,115 | $397,251 | $342,237 | - Nareit FFO increased by 12.9% for the three months and 16.1% for the six months ended June 30, 2025, compared to the prior year periods[206] Liquidity and Capital Resources Discusses Omega's liquidity, capital structure, debt, equity programs, and cash flow, highlighting ability to meet obligations and fund investments Sources and Uses Omega's primary cash sources include rental/interest income, credit facilities, equity, and asset sales, funding dividends, debt, and investments - Primary cash sources include rental/interest income, Revolving Credit Facility, DRCSPP, ATM Program, facility sales, and debt issuance[207] - Anticipated uses include common stock dividends, debt service, real estate investments, and G&A expenses[207] Capital Structure As of June 30, 2025, Omega's capital structure included $10.5 billion in assets, $5.2 billion in equity, and $5.0 billion in debt Capital Structure Summary | Metric | June 30, 2025 (in billions) | | :------------------- | :-------------------------- | | Total assets | $10.5 | | Total equity | $5.2 | | Total debt | $5.0 | | Debt as % of total capitalization | 49.2% | Debt Omega's debt profile as of June 30, 2025, featured a 4.6% weighted average interest rate, 95.0% fixed-rate debt, and investment-grade ratings - Weighted average annual interest rate of debt was 4.6% as of June 30, 2025, with 95.0% of debt having fixed interest payments[209] - Maintained long-term credit ratings of Baa3 (Moody's) and BBB- (S&P Global and Fitch)[209] - Issued $600 million of 5.200% Senior Notes due 2030 in June 2025[210] - Extended Revolving Credit Facility maturity to October 30, 2025, and 2025 Term Loan maturity to August 8, 2026[211] - As of June 30, 2025, Omega had $734.2 million in cash, $548.6 million remaining under the ATM Program, and $1.45 billion available under its Revolving Credit Facility[212] - Omega OP is the sole guarantor of the Parent's senior notes, which are full, unconditional, and joint and several obligations[215][217] Equity Omega's equity activities included common stock issuance via ATM/DRCSPP and dividend declarations, adhering to REIT requirements - As of June 30, 2025, 293.1 million shares of common stock were outstanding, with a market value of $10.7 billion[218] - Issued 7.3 million shares under the ATM Program for $272.3 million gross proceeds and 6.7 million shares under the DRCSPP for $250.2 million gross proceeds during the six months ended June 30, 2025[219] - Paid $383.8 million in dividends to common stockholders for the six months ended June 30, 2025, maintaining its REIT status[218][220] Material Cash Requirements Omega's material cash requirements include commitments for construction, capital improvements, and loan advancements, totaling $327.3 million Material Cash Requirements Summary | Commitment Type | Remaining Commitments June 30, 2025 (in thousands) | | :------------------------------------------ | :----------------------------------------------- | | Lessor construction and capital commitments under lease agreements | $228,711 | | Non-real estate loan commitments | $60,701 | | Real estate loan commitments | $37,914 | | Total remaining commitments | $327,326 | Other Arrangements Risk from unconsolidated joint ventures is limited to investment/loans; derivatives hedge interest rate and foreign currency risks - Risk of loss from unconsolidated joint ventures is limited to investment and outstanding loans[223] - Derivative instruments are used to hedge interest rate and foreign currency exchange rate exposure[223] Cash Flow Summary Cash, cash equivalents, and restricted cash increased significantly, driven by higher net cash from operating and financing activities - Cash, cash equivalents, and restricted cash increased by $223.8 million to $772.6 million as of June 30, 2025[224] Cash Flow Activities Summary | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Increase/(Decrease) (in thousands) | | :----------------- | :------------------------------------------ | :------------------------------------------ | :--------------------------------- | | Operating activities | $421,217 | $335,577 | $85,640 | | Investing activities | $(444,286) | $(255,972) | $(188,314) | | Financing activities | $241,257 | $(485,221) | $726,478 | - Increase in operating cash flow primarily due to higher net inco