Omega Healthcare Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

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 March 31, 2020


☐	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.

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)


Maryland	1-11316	38-3041398
(Omega Healthcare Investors, Inc.)	(Omega Healthcare Investors, Inc.)	(Omega Healthcare Investors, Inc.)
Delaware	333-203447-11	36-4796206
(OHI Healthcare Properties Limited Partnership)	(OHI Healthcare Properties Limited Partnership)	(OHI Healthcare Properties Limited Partnership)
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(IRS Employer Identification No.)

303 International Circle, Suite 200, Hunt Valley, MD 21030

(Address of principal executive offices)

(410) 427-1700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.10 par value	OHI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.


Omega Healthcare Investors, Inc. Yes ☒ No ☐	OHI Healthcare Properties Limited Partnership Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).


Omega Healthcare Investors, Inc. Yes ☒ No ☐	OHI Healthcare Properties Limited Partnership Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Omega Healthcare Investors, Inc.


Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ◻	Emerging growth company ◻

OHI Healthcare Properties Limited Partnership


Large accelerated filer ◻	Accelerated filer ◻	Non-accelerated filer ⌧	Smaller reporting company ◻	Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Omega Healthcare Investors, Inc. ☐

OHI Healthcare Properties Limited Partnership ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Omega Healthcare Investors, Inc. Yes ☐

No ⌧

OHI Healthcare Properties Limited Partnership Yes ☐

No ⌧

Indicate the number of shares outstanding of each of the issuers’ classes of common stock as of May 1, 2020


Omega Healthcare Investors, Inc.
Common Stock, $.10 par value	226,901,698

OHI Healthcare Properties Limited Partnership
N/A	No common stock outstanding
(Class)	(Number of shares)

Table of Contents

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2020 of Omega Healthcare Investors, Inc. and OHI Healthcare Properties Limited Partnership (“Omega OP”). Unless stated otherwise or the context otherwise requires, (i) references to “Omega” or the “Company” mean Omega Healthcare Investors, Inc. and its consolidated subsidiaries, (ii) references to “Parent” refer to Omega Healthcare Investors, Inc. without regard to its consolidated subsidiaries, and (iii) references to “Omega OP” mean OHI Healthcare Properties Limited Partnership and its consolidated subsidiaries.

Omega is a self-administered real estate investment trust (“REIT”) under the Internal Revenue Code of 1986. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega’s assets are owned directly or indirectly by, and all of Omega’s operations are conducted directly or indirectly through, its operating partnership subsidiary, Omega OP.

Parent directly owned approximately 97% of the issued and outstanding partnership units in Omega OP (the “Omega OP Units”) at March 31, 2020. Each Omega OP Unit (other than those owned by Parent) is redeemable at the election of the holder for cash equal to the then-fair market value of one share of common stock of Parent, subject to Parent’s election to exchange the Omega OP Units tendered for redemption for common stock of the Parent on a one-for-one basis in an unregistered transaction, subject to adjustment as set forth in the partnership agreement. The management of Parent consists of the same members as the management of Omega OP.

The financial results of Omega OP are consolidated into the financial statements of Omega. Omega has no significant assets other than its investments in Omega OP. Omega and Omega OP are managed and operated as one entity. Omega OP has no significant assets other than its interests in non-guarantor subsidiaries.

We believe it is important for investors to understand the few differences between Omega and Omega OP in the context of how we operate as a consolidated company. Omega acts as the general partner of Omega OP. Net proceeds from equity issuances by Parent are contributed to Omega OP in exchange for additional partnership units. Parent and Omega OP incur indebtedness. The net proceeds of the Parent’s borrowings are loaned to Omega OP. The outstanding senior notes and certain other debt of Parent is guaranteed by Omega OP.

The presentations of debt and related interest, including amounts accrued, stockholders’ equity, owners’ equity and noncontrolling interests, are the main areas of difference between the consolidated financial statements of Omega and Omega OP. The differences between debt, stockholders’ equity and owners’ equity result from differences in the debt or equity issued at the Parent and Omega OP levels. With respect to owners’ equity, the units held by the partners in Omega OP other than the Parent are accounted for as owners’ equity in Omega OP’s financial statements and as noncontrolling interests in Omega’s financial statements. Although classified differently, total debt and equity of Omega and Omega OP are the same.

We believe combining the quarterly reports on Form 10-Q of Omega and Omega OP into this single report results in the following benefits:

●

combined reports better reflect how management and the analyst community view the business as a single operating unit;

●

combined reports enhance investors’ understanding of Omega and Omega OP by enabling them to view the business as a whole and in the same manner as management;

●

combined reports are more efficient for Omega and Omega OP and result in savings in time, effort and expense; and

●

combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.

In order to highlight the differences between Omega and Omega OP, the separate sections in this report for Omega and Omega OP specifically refer to Omega and Omega OP. In the sections that combine disclosure of Omega and Omega OP, this report refers to “we” and “us” and actions or holdings as being “our” actions or holdings. Although Omega OP and its subsidiaries hold all of our assets, we believe that reference to “we,” “us” or “our” in this context is appropriate because the business is one enterprise and we operate substantially all of our business through Omega OP.

Table of Contents

OMEGA HEALTHCARE INVESTORS, INC.

OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP

FORM 10-Q

March 31, 2020


TABLE OF CONTENTS
		Page No.
PART I	Financial Information

Item 1.	Financial Statements of Omega Healthcare Investors, Inc.:
	Consolidated Balance Sheets
	March 31, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Operations (unaudited)
	Three months ended March 31, 2020 and 2019	3
	Consolidated Statements of Comprehensive Income (unaudited)
	Three months ended March 31, 2020 and 2019	4
	Consolidated Statements of Changes in Equity (unaudited)
	Three months ended March 31, 2020 and 2019	5
	Consolidated Statements of Cash Flows (unaudited)
	Three months ended March 31, 2020 and 2019	6
	Financial Statements of OHI Healthcare Properties Limited Partnership:
	Consolidated Balance Sheets
	March 31, 2020 (unaudited) and December 31, 2019	7
	Consolidated Statements of Operations (unaudited)
	Three months ended March 31, 2020 and 2019	8
	Consolidated Statements of Comprehensive Income (unaudited)
	Three months ended March 31, 2020 and 2019	9
	Consolidated Statements of Changes in Owners’ Equity (unaudited)
	Three months ended March 31, 2020 and 2019	10
	Consolidated Statements of Cash Flows (unaudited)
	Three months ended March 31, 2020 and 2019	11
	Notes to Consolidated Financial Statements
	March 31, 2020 (unaudited)	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57

Item 4.	Controls and Procedures	58

PART II	Other Information

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59

Item 6.	Exhibits	61

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)


	March 31,		December 31,
	2020		2019
	(Unaudited)
ASSETS
Real estate properties
Real estate investments	$	8,949,912	$	8,985,994
Less accumulated depreciation		(1,846,992)		(1,787,425)
Real estate investments – net		7,102,920		7,198,569
Investments in direct financing leases – net		10,850		11,488
Mortgage notes receivable – net		754,030		773,563
		7,867,800		7,983,620
Other investments		424,723		419,228
Investments in unconsolidated joint ventures		194,407		199,884
Assets held for sale – net		24,125		4,922
Total investments		8,511,055		8,607,654

Cash and cash equivalents		347,965		24,117
Restricted cash		4,057		9,263
Contractual receivables – net		27,429		27,122
Other receivables and lease inducements		398,621		381,091
Goodwill		643,536		644,415
Other assets		104,568		102,462
Total assets	$	10,037,231	$	9,796,124

LIABILITIES AND EQUITY
Revolving line of credit	$	516,760	$	125,000
Term loans – net		796,523		804,738
Secured borrowings		387,835		389,680
Senior notes and other unsecured borrowings – net		3,818,531		3,816,722
Accrued expenses and other liabilities		288,745		312,040
Deferred income taxes		10,192		11,350
Total liabilities		5,818,586		5,459,530

Equity:
Common stock $.10 par value authorized – 350,000 shares, issued and outstanding – 226,866 shares as of March 31, 2020 and 226,631 as of December 31, 2019		22,686		22,663
Common stock – additional paid-in capital		5,997,561		5,992,733
Cumulative net earnings		2,525,323		2,463,436
Cumulative dividends paid		(4,458,207)		(4,303,546)
Accumulated other comprehensive loss		(65,788)		(39,858)
Total stockholders’ equity		4,021,575		4,135,428
Noncontrolling interest		197,070		201,166
Total equity		4,218,645		4,336,594
Total liabilities and equity	$	10,037,231	$	9,796,124

See notes to consolidated financial statements.

Table of Contents

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)


	Three Months Ended
	March 31,
	2020		2019
Revenue
Rental income	$	221,500	$	192,177
Income from direct financing leases		258		260
Mortgage interest income		19,685		18,134
Other investment income		10,652		11,914
Miscellaneous income		929		1,203
Total operating revenues		253,024		223,688

Expenses
Depreciation and amortization		82,643		70,852
General and administrative		15,923		16,133
Real estate taxes		3,666		3,882
Acquisition and merger related costs		(225)		2,949
Impairment on real estate properties		3,639		—
Impairment on direct financing leases		—		7,700
Provision for credit losses		1,486		—
Total operating expenses		107,132		101,516

Other operating income
Gain on assets sold – net		1,838		3
Operating income		147,730		122,175

Other income (expense)
Interest income and other – net		(734)		337
Interest expense		(52,741)		(48,100)
Interest – amortization of deferred financing costs		(2,461)		(2,238)
Realized (loss) gain on foreign exchange		(70)		26
Total other expense		(56,006)		(49,975)

Income before income tax expense and income from unconsolidated joint ventures		91,724		72,200
Income tax expense		(1,005)		(675)
Income from unconsolidated joint ventures		1,560		657
Net income		92,279		72,182
Net income attributable to noncontrolling interest		(2,364)		(2,480)
Net income available to common stockholders	$	89,915	$	69,702

Earnings per common share/unit available to common stockholders:
Basic:
Net income available to common stockholders	$	0.40	$	0.34
Diluted:
Net income	$	0.39	$	0.34

Weighted-average shares outstanding, basic		227,261		204,558
Weighted-average shares outstanding, diluted		234,506		213,523

See notes to consolidated financial statements.

Table of Contents

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Unaudited

(in thousands)


	Three Months Ended
		March 31,
	2020		2019
Net income	$	92,279	$	72,182
Other comprehensive (loss) income:
Foreign currency translation		(18,771)		4,475
Cash flow hedges		(7,844)		(2,703)
Total other comprehensive (loss) income		(26,615)		1,772
Comprehensive income		65,664		73,954
Comprehensive income attributable to noncontrolling interest		(1,679)		(2,541)
Comprehensive income attributable to common stockholders	$	63,985	$	71,413

See notes to consolidated financial statements.

Table of Contents

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2020 and 2019

Unaudited

(in thousands, except per share amounts)


									Accumulated
	Common		Additional		Cumulative				Other		Total
	Stock		Paid-in		Net		Cumulative		Comprehensive		Stockholders’		Noncontrolling		Total
	Par Value		Capital		Earnings		Dividends Paid		Loss		Equity		Interest		Equity
Balance at December 31, 2019	$	22,663	$	5,992,733	$	2,463,436	$	(4,303,546)	$	(39,858)	$	4,135,428	$	201,166	$	4,336,594
Cumulative effect of accounting change (see Note 1)		-		-		(28,028)						(28,028)		(757)		(28,785)
		22,663		5,992,733		2,435,408		(4,303,546)		(39,858)		4,107,400		200,409		4,307,809
Stock-based compensation expense		—		4,635		—		—		—		4,635		—		4,635
Vesting/exercising of equity compensation plan, net of tax withholdings		9		(3,158)		—		—		—		(3,149)		—		(3,149)
Dividend reinvestment and stock purchase plan		9		3,738		—		—		—		3,747		—		3,747
Deferred compensation directors		—		59		—		—		—		59		—		59
Equity Shelf Program		5		1,826		—		—		—		1,831		—		1,831
Vesting/exercising of Omega OP Units		—		(2,608)		—		—		—		(2,608)		2,608		—
Common dividends declared ($0.67 per share)		—		—		—		(154,661)		—		(154,661)		—		(154,661)
Conversion and redemption of Omega OP Units to common stock		—		336		—		—		—		336		(336)		—
Omega OP Units distributions		—		—		—		—		—		—		(7,290)		(7,290)
Comprehensive income:
Foreign currency translation		—		—		—		—		(18,288)		(18,288)		(483)		(18,771)
Cash flow hedges		—		—		—		—		(7,642)		(7,642)		(202)		(7,844)
Net income		—		—		89,915		—		—		89,915		2,364		92,279
Total comprehensive income																65,664
Balance at March 31, 2020	$	22,686	$	5,997,561	$	2,525,323	$	(4,458,207)	$	(65,788)	$	4,021,575	$	197,070	$	4,218,645


Balance at December 31, 2018	$	20,235	$	5,074,544	$	2,130,511	$	(3,739,197)	$	(41,652)	$	3,444,441	$

Price	41.27	EPS	2
Shares	227	P/E	26
MCap	9,348	P/FCF	23
Net Debt	4,577	EBIT	406
TEV	13,925	TEV/EBIT	34
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-02-28
10-Q	2019-09-30	Filed 2019-11-08
10-Q	2019-06-30	Filed 2019-08-08
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-02-26
10-Q	2018-09-30	Filed 2018-11-07
10-Q	2018-06-30	Filed 2018-08-08
10-Q	2018-03-31	Filed 2018-05-10
10-K	2017-12-31	Filed 2018-02-23
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-06-30	Filed 2017-08-09
10-Q	2017-03-31	Filed 2017-05-05
10-K	2016-12-31	Filed 2017-02-24
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-05
10-Q	2016-03-31	Filed 2016-05-06
10-K	2015-12-31	Filed 2016-02-29
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-05
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-02-27
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-06
10-Q	2014-03-31	Filed 2014-05-07
10-K	2013-12-31	Filed 2014-02-11
10-Q	2013-09-30	Filed 2013-11-07
10-Q	2013-06-30	Filed 2013-08-05
10-Q	2013-03-31	Filed 2013-05-09
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-11-07
10-Q	2012-06-30	Filed 2012-08-07
10-Q	2012-03-31	Filed 2012-05-08
10-K	2011-12-31	Filed 2012-02-27
10-Q	2011-09-30	Filed 2011-11-07
10-Q	2011-06-30	Filed 2011-08-08
10-Q	2011-03-31	Filed 2011-05-09
10-K	2010-12-31	Filed 2011-02-28
10-Q	2010-09-30	Filed 2010-11-08
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-03-01

8-K	2020-06-11
8-K	2020-05-04
8-K	2020-03-27
8-K	2020-03-20
8-K	2020-02-05
8-K	2020-01-02
8-K	2019-12-16
8-K	2019-11-05
8-K	2019-09-17
8-K	2019-09-09
8-K	2019-08-06
8-K	2019-06-07
8-K	2019-05-17
8-K	2019-05-07
8-K	2019-02-11
8-K	2019-02-01
8-K	2019-01-02
8-K	2018-12-14
8-K	2018-11-05
8-K	2018-10-31
8-K	2018-10-23
8-K	2018-09-07
8-K	2018-08-03
8-K	2018-06-11
8-K	2018-05-07
8-K	2018-04-27
8-K	2018-02-13

EX-10.1	ohi-20200331ex1018ed175.htm
EX-10.2	ohi-20200331ex10265e3e8.htm
EX-10.3	ohi-20200331ex1037c3074.htm
EX-31.1	ohi-20200331ex311e2d087.htm
EX-31.2	ohi-20200331ex31265ef5c.htm
EX-31.3	ohi-20200331ex313074b6d.htm
EX-31.4	ohi-20200331ex314d065e1.htm
EX-32.1	ohi-20200331ex321250fb7.htm
EX-32.2	ohi-20200331ex3225d32e7.htm
EX-32.3	ohi-20200331ex3233ad81f.htm
EX-32.4	ohi-20200331ex32488d103.htm

OHI 10Q Quarterly Report

Omega Healthcare Earnings 2020-03-31