Omega Healthcare (OHI) Q2 Revenue Up 12%

Key Points

• - GAAP revenue for Q2 2025 reached $282.5 million, beating analyst expectations by 17.4% and Revenue was up 11.8% from Q2 2024.

• - The quarterly dividend was maintained at $0.67 per share, fully covered by current cash flow.

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Omega Healthcare Investors (NYSE:OHI) is a real estate investment trust specializing in senior care facilities, particularly skilled nursing and assisted living properties. On July 31, 2025, the company reported financial results, marking a period of notable growth in both GAAP earnings and revenue. GAAP revenue came in at $282.5 million, significantly above analyst expectations of $240.6 million (GAAP). GAAP earnings per share were $0.46, exceeding the anticipated $0.43 GAAP EPS. The quarter was marked by new investments, steady dividend coverage, and positive operator developments, making it a strong period overall for Omega Healthcare Investors.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Omega Healthcare Investors operates as a real estate investment trust (REIT), owning and financing healthcare facilities, mainly skilled nursing facilities and assisted living centers. Its revenue comes from long-term lease agreements with facility operators. The company’s portfolio spans both the United States and the United Kingdom, with a focus on high-yield, triple-net-leased real estate.

Central to Omega’s business is evaluating the creditworthiness and performance of its operating partners. Key measures include the operators’ ability to pay rent and adapt to regulatory and reimbursement changes, particularly in highly regulated healthcare markets. Strategic portfolio management, paired with selective investment and divestment activity, supports its mission to optimize long-term returns while mitigating risk from operator distress or regulatory shifts.

Quarter Highlights: Investments, Operating Metrics, and Capital Moves

The quarter delivered standout financial results, with GAAP revenue beating expectations by $41.9 million and GAAP earnings per share also surpassed estimates. Core performance metrics, such as Adjusted Funds From Operations (AFFO, a non-GAAP cash flow measure important in real estate investment trusts), increased from $0.71 per share in Q2 2024 to $0.77 per share. This improvement came despite a higher number of shares outstanding, reflecting accretive investments expanding total earnings and cash flow.

Omega invested $527 million. The bulk ($502.1 million) went to real estate acquisitions, including a major transaction to acquire 45 facilities in the U.K. for $344 million at a 10% initial cash yield. There were also $24.8 million in new real estate loans, and seven facilities were sold for $62.1 million, resulting in a $22.9 million gain. These actions highlight the company’s ongoing strategy to recycle capital from non-core assets into higher-yielding opportunities and to maintain portfolio quality.

The company recorded $14.2 million in impairments on three facilities, signaling some asset-level challenges—a normal part of the skilled nursing sector. On the operator front, LaVie's exit from bankruptcy in June 2025 and the assignment of its lease to Avardis preserved $3.1 million in monthly rent. Maplewood, another major operator, demonstrated increased rent payments in Q1 2025, with rent rising to $15.6 million from $12.3 million in Q4 2024. Genesis Healthcare entered Chapter 11 in July 2025, but continued to pay full rent and interest, and Omega provided debtor-in-possession financing to support ongoing payments. Management cited “substantial” collateral coverage for loans as of Q1 2025, affirming income stability in the near term.

Portfolio operating metrics pointed to improvement. Occupancy for the trailing 12 months ended March 31, 2025 was 82.2%, up from 80.9% for the twelve months ended June 30, 2024. The EBITDAR/rent coverage ratio—an important measure of operators’ ability to meet rent obligations—improved from 1.49x for the twelve months ended June 30, 2024 to 1.51x for the twelve months ended March 31, 2025. In terms of revenue mix, the share derived from private payors (individuals or insurers rather than government sources) rose from 8% ten years ago to 39% as of Q1 2025, continuing a years-long trend to diversify away from government reimbursement risk.

On the capital management front, Omega remained active in the debt and equity markets. It issued $600 million in senior notes due 2030 in June 2025 and extended its revolving credit facility, which now has $1.45 billion in available capacity as of June 30, 2025. Cash on hand stood at $734.2 million, and $258 million in new equity was raised via share issuance. The company kept leverage within long-term target ranges and prioritized fixed-rate debt to limit interest rate exposure.

Regulatory developments—especially the positive outcome of a federal court ruling in April 2025 invalidating new minimum staffing rules—removed a near-term headwind for the sector. However, Medicaid reforms and government payment policies continue to pose longer-term risks, and management stressed ongoing vigilance in monitoring policy shifts. Dividend payments remained steady, with the $0.67 per share payout was fully covered by funds available for distribution (FAD) of $0.74 per share.

Looking Ahead: Guidance and Key Watch Items

Management raised full-year 2025 guidance for Adjusted Funds From Operations (non-GAAP) to $3.04–$3.07 per share, up from the prior range of $2.95–$3.01 per diluted share for 2025 Adjusted FFO. This new outlook reflects stronger-than-expected portfolio performance, increased investment activity, and an optimistic view of operator stability and revenue continuity—assuming current rent collections persist, most notably from Genesis and Avardis, as reflected in the Company's increased 2025 AFFO guidance, which assumes both operators continue to pay their full contractual obligations.

The guidance for 2025 Adjusted Funds From Operations (AFFO) assumes no further cash-basis switches by operators, no large new acquisitions or divestitures beyond those already announced, and continued portfolio health. Omega’s outlook may shift if macroeconomic changes or regulatory policy shifts affect Medicaid reimbursement or operator liquidity. The company continues to closely monitor operator bankruptcies, the pace of new investments, and the risk of dilution from equity issuance, while keeping an eye on policy debates that could affect government payment for healthcare services. The quarterly dividend was maintained at $0.67 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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