What Omega Healthcare Investors (OHI) Said on Its Q3 Earnings Call

Key Points

• Omega raised its 2026 AFFO guidance to $3.28–$3.30 per share, with the midpoint representing about 6% growth from 2025.
• After quarter-end, Omega completed nearly $1 billion in investments, including an $846 million loan tied to 55 U.K. care homes. It also moved 32 Florida facilities to PACS, increasing annual contractual rent by $26.1 million.
• Third-quarter revenue increased to $341 million, while net income fell to $83 million, largely due to transition and acquisition-related expenses and the absence of a prior-year asset-sale gain. The company ended the quarter with $196 million in cash, no revolver borrowings, and leverage of 3.1 times.

Omega Healthcare Investors NYSE: OHI raised its full-year 2026 earnings outlook after completing nearly $1 billion in investments following the third quarter and transitioning 32 Florida skilled nursing facilities to a new operator at higher rent.

The healthcare real estate investment trust now expects adjusted funds from operations, or AFFO, of $3.28 to $3.30 per share for the year, up from its previous range of $3.22 to $3.26. The new midpoint of $3.29 represents an increase of about 6% from 2025, Chief Financial Officer Neal Ballew said on the company’s third-quarter earnings call.

Third-quarter revenue rose to $341 million from $312 million a year earlier, primarily reflecting $31 million in resident fees and services from the company’s growing operating portfolio. Net income available to common shareholders fell to $83 million, or $0.27 per diluted share, from $180 million, or $0.59 per share.

Ballew attributed the decline primarily to $60 million in acquisition, merger and transition expenses, substantially all related to lease terminations for 30 U.K. care homes converted to operating structures, and a $28 million gain on asset sales in the prior-year quarter.

Quarterly AFFO was $262 million, or $0.82 per share, while funds available for distribution, or FAD, totaled $250 million, or $0.78 per share. Chief Executive Officer Matthew Gourmand said both measures grew year over year but were effectively flat sequentially, partly because of $563 million in asset sales late in the second quarter.

Florida transition lifts rent

In October, Omega completed the transition of 32 Florida skilled nursing facilities from Airamid-affiliated operators to PACS. The properties were added to Omega’s existing PACS master lease at first-year annual contractual rent of $58 million, an increase of $26.1 million over the prior rent.

Omega paid Airamid a $90 million lease termination fee. Chief Investment Officer Vikas Gupta said the transaction is expected to add approximately $0.065 per share to annualized FAD. Rent will increase by approximately $2.5 million in the second year, followed by annual increases of 2% thereafter.

Gupta emphasized that the transition was not driven by performance or rent collection problems at Airamid. Gourmand said Omega sees further opportunities to increase returns through portfolio management, although he cautioned that the timing and scale depend on finding partners willing to transact.

During the third quarter, Omega also spent $48 million to convert 30 U.K. care homes from triple-net leases to RIDEA operating structures. Ballew estimated the conversions would produce a 26% yield on that outlay based on the properties’ existing cash flow after rent. Gourmand said the company also sees potential operating upside.

U.K. investment leads acquisition activity

Omega completed $181 million in new investments during the third quarter and another $946 million after quarter-end. The latter included an $846 million mortgage loan secured by a portfolio of 55 Runwood care homes and leasehold interests in England.

The loan to existing Omega tenant Foundation Partners carries an initial interest rate of 8.72%. Gupta said Omega expects to exercise a purchase option and convert the loan to a lease after regulatory approvals, which the company anticipates will take about a year. The initial lease yield is expected to match the loan yield, with a potential future rent reset tied to improved portfolio performance.

Gupta said the Runwood transaction was marketed through a competitive process and that the loan structure helped Omega close quickly. Gourmand said the company generally prefers owning real estate to making loans unless a loan provides access to property or participation in economic upside.

Omega reported approximately $1.5 billion in new investments year to date. Its pipeline remains strong, Gupta said, with opportunities across skilled nursing, senior housing and U.K. care homes, though it currently leans more toward senior housing operating structures and U.K. care homes.

Genesis resolution and balance sheet

Omega said the Genesis Chapter 11 bankruptcy sale was finalized in October, with its master lease assumed by 101 West Street, an affiliate of NewGen. Omega received repayment of its debtor-in-possession loan and a $150 million term loan.

Gupta said Omega retained the same rent and escalators under the lease. The company’s guidance assumes NewGen pays contractual rent of $13.3 million per quarter and that Maplewood continues paying $6.9 million a month, consistent with September. The outlook includes investments completed through November 3 but excludes additional investments not outlined in the earnings release.

At quarter-end, Omega had $196 million in cash and no borrowings outstanding on its $2 billion revolving credit facility. Its leverage ratio fell to 3.1 times. Ballew said the company is targeting leverage below four times for the foreseeable future and could issue equity to pay down revolver borrowings used to fund investments. He also said a combination of a term loan and share-sale proceeds could be used for a $700 million bond maturing in April 2027.

Operating conditions remained supportive, executives said. Trailing 12-month operator EBITDA coverage for the core triple-net and mortgage loan portfolio improved to 1.67 times as of June 30 from 1.65 times in the prior reporting period, while occupancy edged up to 82.7% from 82.6%.

Megan Krull, senior vice president of data, intelligence and government relations, said reimbursement has generally met expectations and that Omega sees limited near-term risk of meaningful regulatory change. She added that the company remains attentive to how a changing political environment could affect oversight over the longer term.

About Omega Healthcare Investors (NYSE:OHI)

Omega Healthcare Investors, Inc is a real estate investment trust focused on the healthcare sector. The company invests in and owns healthcare facilities, with a primary emphasis on skilled nursing and assisted living properties.

Omega generally leases its properties to healthcare operators under long-term agreements, supporting services for seniors and individuals who require post-acute, rehabilitative, or long-term care. Its portfolio has also included other healthcare-related properties, such as continuing care retirement communities and specialty facilities.

Founded in 1992 and headquartered in Hunt Valley, Maryland, Omega serves healthcare operators across the United States and the United Kingdom.

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