Omega Healthcare Investors Inc Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Jonathan Hughes - Raymond James - Analyst : Good morning. Thanks for the prepared remarks and commentary. I was hoping you could share some more details on Genesis and then not paying rent and interest in March but then paying in April. I know that was surprising as we haven't really heard from them in a few years, but the shortfall was driven by their ABL lender. Can you just remind us of the Genesis corporate capital structure if they're on accrual or cash accounting and then the geographic footprint of your Genesis portfolio.

Question: Jonathan Hughes - Raymond James - Analyst : Okay, that's great color. I appreciate that. And then, I've got more Genesis questions, but I'll save those, and I'll ask one about acquisitions. Can you, maybe share more details on the UK portfolio acquisition? We've seen a lot more interest lately in UK healthcare real estate from various capital sources. So yeah, I was pleasantly surprised to see the attractive 10% yield on that transaction. Can you just talk about how that deal evolved and share some details on composition of that portfolio? Thank you.

Question: Jonathan Hughes - Raymond James - Analyst : Alright, I appreciate the call. I'll hop off. Thank you for the time.

Question: Seth Berge - Citi - Analyst : Hi, thanks for taking my question. I guess you've seen any immigration impact on labor availability and wage pressures?

Question: Seth Berge - Citi - Analyst : Great and then I guess for my follow up just going back to Genesis, do you have any sense of if they operating fundamentals are improving, or do you have any metrics you could provide there?

Question: Juan Sanabria - BMO Capital Markets - Analyst : Hi, good morning. Just on Genesis, on the loan portion, how much, I guess, PIK interest or other kind of noncash is there where if that has to switch for whatever reason, you have a lot of credit behind that would be potentially at risk.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Okay, great. And just curious there was one of your larger cap peers did a significant transaction first time in a while. Did you guys look at that or how do you see them in in other deals? Or just curious on this data competition for [USB] simple acquisitions here and if there's been any impact as a result of dodge cuts to financing availability from hot or otherwise as a result of the government job cuts.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Yeah, I think they would say the same thing, but yeah, yes.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Okay, and just this is a -- with the doge cuts, has there been any change to like the receptiveness or availability of hard lending as a result of cuts? I don't know if like that that particular department was downsized or what, but is that going to impact that financing availability generally? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, OHI.N - Q1 2025 Omega Healthcare Investors Inc Earnings Call

Question: Juan Sanabria - BMO Capital Markets - Analyst : Thank you guys. I appreciate it.

Question: Emily Meckler - Green Street - Analyst : Hi everyone, thanks for the time. Can you provide a little more color on the PACS portfolio? And to what extent you'd be able to retenant the current facilities operated by the company? And how have coverage levels trended over the past couple of quarters?

Question: Emily Meckler - Green Street - Analyst : Okay. Great, thank you. And then just want to kind of turn to the transaction market. Has your underwriting criteria shifted over the past few months, specifically in the US given the potential changes to Medicaid repayments?

Question: Emily Meckler - Green Street - Analyst : Okay. Thank you for the time.

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Hi, yeah, good morning, everyone. So on Genesis again you had mentioned earlier like it's just again lending markets are a little bit tougher in general. Just kind of curious again what we're seeing with Genesis of the ABL lender reducing capacity. I mean, are you starting to see that more broadly in the industry just because lending is getting tighter, or do you really kind of really look at this more as a Genesis specific issue?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Okay, that's helpful. And then for the term loan book, the $118 million, if you were to hazard a guess of the LTV on those assets relative to the collateral, like, what would that number be?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Got you. Okay. That's helpful. Maplewood, once it's all stabilized, what would be the run rate for the rent?

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Yeah, the contractual, yeah. What do you get to at the end of it all?

Question: Nick Yulico - Scotiabank - Analyst : Thanks. Good morning. Just turning to LaVie. You talked about the entity. It's going to be the master lease assigned to a new entity, no change to rent expected. Can you just remind us, is that -- does that mean then that the escalator is going to kick back in? What is the escalator there? And then also, is there any like straight line rent that gets returned on and once they exit bankruptcy?

Question: Nick Yulico - Scotiabank - Analyst : So there's going to be straight line rent benefit that starts to kick in again on the lease?

Question: Nick Yulico - Scotiabank - Analyst : Is there a way can you just remind us like quantify what that benefit is?

Question: Nick Yulico - Scotiabank - Analyst : Okay, got it. We can follow up, thanks. And then just the second question is any, high level perspective you could share on provider tax? I know you talked about it a little bit and potential Medicaid changes are in flux, but just at a high level? Like anything you're hearing about, what that could turn out to be if it's a proposal. And, any sort of early thoughts on impact to the portfolio, thanks.

Question: Nick Yulico - Scotiabank - Analyst : Okay, great. Thank you.

Question: John Kilichowski - Wells Fargo - Analyst : Thank you. Good morning. Maybe on the disposition side, you did a lot in the quarter. I'm curious if that was just a clean up of noncore assets or you're being opportunistic on a good deal. Just curious what prompted.

Question: John Kilichowski - Wells Fargo - Analyst : Got it. And then just in the opening remarks, it sounded like a commentary about the opportunities in the US for your pipeline were improving because a lot of the activity we've seen in the UK. I'm curious what you think the rest of the year is going to look like in terms of acquisition opportunities between the US and the UK.

Question: John Kilichowski - Wells Fargo - Analyst : And I guess last thing just kind of piggybacking on that is has your underwriting changed for those deals in the US based on what we've seen and kind of the the overhang of the Medicaid concerns.

Question: Farrell Granath - Bank of America - Analyst : Good morning. Going back to the UK market, I'm curious about how you get comfortable with extending into new operators. And can you just specifically characterize your platform and if it's any different than what you do in the US?

Question: Farrell Granath - Bank of America - Analyst : Thank you. And also your comment about the material change in the transaction market in the US, I'm curious what, when you're coming to deals, are you seeing greater competition? And is that changing any cap rates that are coming to the table? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, OHI.N - Q1 2025 Omega Healthcare Investors Inc Earnings Call

Question: Farrell Granath - Bank of America - Analyst : Okay. Thank you very much.

Question: Wes Golladay - Baird - Analyst : Good morning, everyone. Can you talk about your FX exposure now?

Question: Wes Golladay - Baird - Analyst : Okay. And then you have in your credit facility, are you looking to do something bigger at the end of the year?

Question: Richard Anderson - Wedbush Security - Analyst : So, in the beginning you said, you're not worried at all about Genesis, which it was worrisome. I guess, the fact that you have to say. And, it may all work out perfectly fine, but correct me if I'm wrong, and maybe this is the wrong way to look at it, but the 3.5 million that's remaining on the letter of credit seems so thin relative to the future. Is that a fair way to think about it, or am I looking at it the wrong way? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, OHI.N - Q1 2025 Omega Healthcare Investors Inc Earnings Call

Question: Richard Anderson - Wedbush Security - Analyst : Okay. All right. I guess I'll move on from that. The other thing I wanted to ask about was the 2.8% CMS recommendation for fiscal year 2026 and the value-based adjustment of 2%. I kind of queried about this and you all think that the right number to think about relative to the 4.2 of this year is 2.8%, putting aside the incentive component of value of the VBP. But some see it differently, and I'm wondering where you stand. Is the real number 2.8% or is it some fraction of that or some lower number of that when you take into account, staffing, and you take into account wages, and you take into account, again, the VDP adjustment. What's the real number for 2026 in your mind?

Question: Richard Anderson - Wedbush Security - Analyst : Okay, so is it overly simplistic to take the 2.8%, subtract the 2%, and then assume that the your operators will meet those thresholds and you'll end up at 2.8%. Is that the, is that the way to think about it, or am I kind of oversimplifying?

Question: Richard Anderson - Wedbush Security - Analyst : Yeah, that's what I'm asking. Yeah, I mean, we have a swings. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, OHI.N - Q1 2025 Omega Healthcare Investors Inc Earnings Call

Question: Richard Anderson - Wedbush Security - Analyst : Okay. Okay, that's the answer then. Thank you very much.

Question: Michael Carroll - RBC Capital Markets - Analyst : Yeah, thanks. I guess, Megan, I wanted to circle back on the provider tax comments. I know the House Republicans' initial menu of budget cuts included reducing the provider tax or potentially reducing the threshold to 3%. And I think you just said that they're talking about only reducing it by 100 to 200 basis points. I mean, has that changed or is it still kind of that evolving scenario where we just don't know yet where they want to set it, even if they do want to do something with it?

Question: Michael Carroll - RBC Capital Markets - Analyst : Okay, no that that makes perfect sense. And then if I can just sneak one Genesis question. And did they pay their May rent yet, I guess, or how long do they have until they, need to pay their May rent?

Question: Vikram Malhotra - Mizuho - Analyst : Thanks for taking the question. I guess just going back to Genesis in your conversations with them, why did the ABL lender shrink the borrowing base? Did something change, in the business or the collateral? And can you just clarify, is this AB lender, done this with any other operator?

Question: Vikram Malhotra - Mizuho - Analyst : Okay, just going back to the comments from the US acquisition, I guess, last quarter and maybe in the quarter before that, you sort of said it's you were, much more focused on the US, less opportunities that makes sense for you. So I'm wondering like apart from rates like what else has changed for the pool to become, larger, number one, and then more attractive to Omega.

Question: Vikram Malhotra - Mizuho - Analyst : Okay, great. And then, Bob, if I can just lastly clarify, you'd mentioned kind of having enough capital to deal with, the 26 debt payments if I'm -- correct me if I'm wrong. But does that essentially mean through the year you'll be raising a fair amount of equity to kind of deal with that and acquisitions as well.

Question: Vikram Malhotra - Mizuho - Analyst : Thank you.

Question: Omotayo Okusanya - Deutsche Bank - Analyst : Yes, that's a very quick follow up from Megan. Are you hearing anything about the federal government maybe potentially filing an appeal against a judgment on minimum staffing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, OHI.N - Q1 2025 Omega Healthcare Investors Inc Earnings Call

Question: Juan Sanabria - BMO Capital Markets - Analyst : For Genesis, Taylor, how should we think of or what's the meaning behind the pool of collateral that was aging? Does that mean there's like a growing AR or bad debt balance for Genesis, or is that the same collateral pool you guys have? Just hoping for a little bit more color if that possible. This is with regards to the ABL question, sorry.

Question: Juan Sanabria - BMO Capital Markets - Analyst : So I was basically following up on Vikram's question with regards to the ABL, the shrinking borrowing base. And you said it's the pool of collateral that was aging. I just, I'm not sure what that means. I'm just hoping for a little bit of clarification.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Understood. Sorry about that. And just one quick one for me. How should we think of the cap rates for the yields for the first quarter dispositions?

Question: Juan Sanabria - BMO Capital Markets - Analyst : Thank you.