Omega Healthcare Investors Q1 Earnings Call Highlights

Key Points

• Omega reported Q1 results with Adjusted FFO of $0.82 and FAD of $0.78 per share on $323 million of revenue, narrowed full‑year AFFO guidance to $3.19–$3.25, and cut the dividend payout ratio to 82% of AFFO (86% of FAD).
• Management is selling 18 CommuniCare assets for a contractual $480 million (12 sold after quarter‑end, six expected in Q2) and expects redeployment of proceeds to add about $0.03 of annual AFFO/FAD, assuming reinvestment yields in the low‑to‑mid‑9%s to low‑10%s.
• Omega remains active on acquisitions with $326 million of new investments YTD and a quarter weighted‑average lease/loan yield of 10.9%, while expanding RIDEA activity and targeting mid‑teen IRRs for senior housing deals.

Omega Healthcare Investors NYSE: OHI reported first-quarter 2026 results that management said reflected strong revenue growth driven by acquisitions and active portfolio management, while also outlining guidance updates and progress on a major asset sale. On the company’s earnings call, CEO Taylor Pickett said Adjusted FFO (AFFO) came in at $0.82 per share and funds available for distribution (FAD) totaled $0.78 per share.

Pickett said the quarter’s results were “principally fueled by acquisitions and active portfolio management,” and noted that the dividend payout ratio declined to 82% of AFFO and 86% of FAD. He also highlighted planned and partially completed second-quarter asset sales expected to generate $480 million in proceeds, which management expects to redeploy in a way that adds roughly $0.03 of annual AFFO and FAD.

First-quarter results and updated outlook

President Matthew Gourmand said the team remains focused on “growing FAD per share on a sustainable basis,” and pointed to a 9.5% year-over-year increase in FAD per share. Gourmand said that performance and the company’s investment pipeline supported an increase to the low end of Omega’s full-year AFFO guidance, lifting the midpoint by $0.02 to $3.22.

CFO Bob Stephenson said first-quarter revenue was $323 million, up from $277 million in the first quarter of 2025, attributing the increase primarily to revenue from investments completed throughout 2025 and 2026, annual escalators, and portfolio management actions. Net income was $159 million, or $0.47 per share, compared with $112 million, or $0.33 per share, a year earlier. Stephenson reported Adjusted FFO of $260 million ($0.82 per share) and FAD of $247 million ($0.78 per share).

Stephenson said AFFO and FAD were each $0.02 higher than the fourth quarter, driven mainly by incremental net income from $585 million of new investments completed over the fourth and first quarters, along with $2 million of revenue from annual escalators. Those benefits were partially offset by income lost from $53 million in asset sales and $88 million in loan repayments over the past two quarters, which Stephenson said reduced first-quarter AFFO and FAD by $1.4 million, as well as dilution from a combined 7.7 million common shares and OP units issued over the past two quarters to help fund investments.

Omega narrowed full-year 2026 Adjusted FFO guidance to a range of $3.19 to $3.25 per share, which Stephenson described as a $0.02 increase to the midpoint of February guidance. He said the guidance includes the impact of investments completed as of April 27 and excludes additional transactions beyond those outlined in the earnings release. Guidance assumptions also incorporate scheduled loan repayments and expected asset sales, including the CommuniCare portfolio planned to be sold for $480 million. Stephenson said Omega’s first-quarter rent related to those CommuniCare facilities totaled $9.2 million.

CommuniCare sale: pricing, rationale, and redeployment plans

Management spent significant time discussing the sale of 18 CommuniCare assets in Maryland and West Virginia for a contractual purchase price of $480 million at a blended 7.7% rent discount. CIO Vikas Gupta said that after quarter-end, Omega sold 12 Maryland facilities and expects to sell the remaining six West Virginia facilities in the second quarter.

Gourmand called the disposition “opportunistic,” saying Omega had “an opportunity to sell assets and enhance our credit with CommuniCare,” and cited strong demand in those markets. Responding to a question on whether the sale signaled broader market conditions, he said, “I don’t think you can expect us to be doing this as part of the core business,” adding that he would not expect additional large dispositions in the next few quarters.

On redeployment assumptions behind the expected $0.03 annual accretion, Gourmand said management opted for a conservative approach. He said the implied reinvestment math was “probably…in the low 9s,” while adding, “I still think we’re going to expect to deploy capital in the 10s.” He declined to discuss how much capital was tied to specific LOIs.

Portfolio performance and Genesis bankruptcy update

Gupta said operator coverage continued to trend favorably. Omega’s trailing 12-month operator EBITDAR coverage for its triple-net and mortgage core portfolio was 1.58x as of Dec. 31, 2025, up from 1.57x reported for the third quarter of 2025. He said this was the highest coverage level in more than a decade and reflected a “relatively favorable operating backdrop” alongside efforts to strengthen lease credit.

Gupta also provided an update on Genesis’ bankruptcy process. He said Omega committed to fund up to $26.7 million (one-third) of a new $80 million debtor-in-possession (DIP) loan and had funded $25 million of the initial $75 million advance by the end of the first quarter. Proceeds from the new DIP financing were used to repay the original DIP loan and fund working capital needs, he said.

Gupta said the debtor had been advised that 101 West State Street submitted a qualified financing commitment required under the asset purchase agreement. The closing date can be extended contractually through the end of the third quarter, and Gupta said closing is conditioned on several factors, including regulatory change-of-ownership approvals. He added that Omega anticipates 101 West State Street will assume Omega’s Genesis master lease and that Omega’s DIP loan and term loan would be paid off from closing consideration. Gupta said Omega remained confident its term loan was fully collateralized, while noting the assumptions remain subject to developments in the bankruptcy proceeding.

Investments, pipeline, and RIDEA expansion

Gupta said Omega’s transaction activity started 2026 with $326 million in new investments year to date. During the first quarter, the company completed $251 million in new investments, excluding $13 million in CapEx, including:

• A 9.9% equity interest purchase in Saber’s operating company (previously announced)
• A $109 million acquisition of 13 Georgia skilled nursing facilities
• A $10 million investment in an Alabama senior housing RIDEA transaction
• A $7 million purchase of a U.K. care home
• $27 million in real estate loans

Gupta said the weighted-average yield on the quarter’s leases and loans was 10.9%. After quarter-end, he said Omega closed an additional $75 million of investments: two Indiana skilled nursing facilities for $33 million (leased to an existing operator at a 10% lease yield) and three senior housing facilities in Rhode Island for $42 million to be operated through Omega’s RIDEA structure with a third-party manager.

Management described a competitive transaction environment across senior housing and skilled nursing, with an emphasis on sourcing value-add opportunities. Gourmand said Omega does not target a specific minimum initial yield, arguing the focus should be on long-term opportunity and visibility rather than “a competition to see how low we can go.” He said Omega has been finding investments “stabilized at 7, 8, 9” where the company believes it can lift returns into double digits through relatively straightforward improvements, and that the company is generally focused on what it considers value-add opportunities.

Gupta said Omega continues to target “mid-teen” IRRs for senior housing RIDEA opportunities and acknowledged competition in the space, while saying the company is still finding assets that meet its criteria. He also said Omega is evaluating RIDEA opportunities in the U.K. and that it will become part of the company’s strategy there going forward.

Policy and reimbursement commentary; dividend discussion

SVP Megan Krull discussed the regulatory backdrop, saying state budget discussions related to the OVVBA have been “relatively quiet,” with more meaningful discussions not expected until next year. She also referenced increased scrutiny of Medicare Advantage related to “upcoding, high denial rates, delayed payments, and cost savings not keeping pace with expectations,” and noted bipartisan legislation introduced in Congress that industry associations applauded.

Krull said Medicare Advantage is a relatively small portion of Omega operators’ business, though it can affect decision-making in certain markets where rates may be lower than traditional Medicare. She also cited Indiana’s decision to unwind managed Medicaid for long-term care nursing home populations, saying it reflected similar issues seen in Medicare Advantage.

On the dividend, Pickett said it remains a board decision, but pointed to FAD per share rising from $0.71 in the first quarter of 2025 to $0.78 in the first quarter of 2026. “I would think by year-end, the board’s going to need to start having conversations about our dividend,” he said. Gourmand added that the pace of capital redeployment is a key variable, saying the “tools are all there” to continue delivering growth, dependent on how quickly Omega recycles capital into new investments.

About Omega Healthcare Investors NYSE: OHI

Omega Healthcare Investors, Inc is a real estate investment trust (REIT) that specializes in the ownership and management of healthcare-related facilities. The company's core business involves acquiring and leasing long-term care properties, including skilled nursing facilities and assisted living communities, under net lease agreements. Its portfolio is designed to provide stable, inflation-protected cash flows from operators responsible for day-to-day property management.

Founded in 1992 and headquartered in Hunt Valley, Maryland, Omega Healthcare Investors has grown its holdings to encompass hundreds of facilities across the United States, with a smaller presence in select international markets.

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