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Omega Healthcare (OHI)
NYSE:OHI
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Omega Healthcare
(NYSE:OHI)76Outperform
Positive Factors
Balance Sheet Strength
Management has been opportunistic with equity capital raising, allowing the company to build an excess cash position ahead of debt maturities, providing potential for acquisitions.
External Growth
The attractive external growth trajectory for Omega Healthcare Investors is still intact.
Financial Performance
Omega Healthcare Investors reported 4Q24 core FFO of $0.74, beating expectations due to higher-than-expected NOI and interest income.
Negative Factors
Investigation Risks
PACS announcement of delaying earnings and being under investigation has created tactical and messaging concerns.
Operator Risks
There are risks due to exposure to PACS Group, one of its largest operators, and uncertainties around potential Medicaid cost-cutting efforts.
Regulatory Risks
Regulatory uncertainty remains as a concern, affecting the overall risk-reward assessment and leading to a neutral rating.
Omega Healthcare (OHI) vs. S&P 500 (SPY)
Market Cap
$10.38B
Dividend Yield7.27%
Average Volume (3M)2.17M
Price to Earnings (P/E)24.5
Beta (1Y)0.15
Revenue Growth9.90%
EPS Growth56.41%
CountryUS
Employees60
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)1.53
Shares Outstanding281,837,000
10 Day Avg. Volume2,181,634
30 Day Avg. Volume2,170,375
Financial Highlights & Ratios
PEG Ratio0.43
Price to Book (P/B)N/A
Price to Sales (P/S)9.88
Price to Cash Flow (P/CF)11.30
P/FCF Ratio33.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$41.00Price Target Upside9.68% Upside
Rating ConsensusHold
Number of Analyst Covering10
Omega Healthcare Business Overview & Revenue Model
Company DescriptionOmega Healthcare Investors, Inc. (OHI) is a real estate investment trust (REIT) that primarily invests in and provides financing to the long-term healthcare industry. The company focuses on acquiring and leasing skilled nursing facilities (SNFs) and assisted living facilities (ALFs) across the United States and the United Kingdom. Omega Healthcare works closely with experienced operators to ensure high-quality care and operational efficiency within its facilities.
How the Company Makes MoneyOmega Healthcare makes money primarily through leasing properties to healthcare operators. The company's revenue model is built on long-term, triple-net lease agreements, where the tenant is responsible for paying property taxes, insurance, and maintenance costs in addition to rent. This structure provides Omega with a stable and predictable revenue stream. The company also benefits from rent escalations included in its lease agreements, which help offset inflation and increase income over time. Additionally, Omega occasionally engages in strategic acquisitions and dispositions of properties to optimize its portfolio and enhance returns. Partnerships with reliable operators and the growing demand for healthcare services, particularly for aging populations, are significant factors contributing to Omega's earnings.
Omega Healthcare Financial Statement Overview
Summary
Omega Healthcare's financial statements reflect strong profitability, stable financial structure, and effective cash flow management. The company has demonstrated significant revenue growth and improved profitability margins, with no current debt enhancing its balance sheet strength. While there is a slight decline in free cash flow, the overall financial health remains robust, positioning Omega Healthcare well within the REITs industry.Income Statement
Omega Healthcare shows a strong financial performance with a solid gross profit margin of 84.1% and an impressive net profit margin of 39.2% for TTM. The revenue growth rate is 11.3% from the previous year, indicating a positive upward trajectory. The EBIT margin stands at 77.2%, and the EBITDA margin is 89.9%, reflecting high operational efficiency. These metrics suggest robust profitability and effective cost management.85
Very Positive
Balance Sheet
The company has a strong equity position with a debt-to-equity ratio of 0.0 in the TTM, indicating no current debt and a significant improvement from previous years. The return on equity for TTM is 9.1%, showcasing profitability relative to shareholder investments. The equity ratio is 50.1%, suggesting a stable capital structure with a balanced approach to leverage and equity. These factors contribute to financial stability, although the past debt levels should be monitored.78
Positive
Cash Flow
Omega Healthcare exhibits strong cash flow management with a positive free cash flow growth rate of -18.9% from the previous year, indicating a decrease but still maintaining substantial free cash flow. The operating cash flow to net income ratio is 1.26, and the free cash flow to net income ratio is 1.21, reflecting efficient cash conversion and strong cash generation capabilities. Despite the minor decline in free cash flow, the overall cash flow position remains healthy.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.05B | 949.74M | 878.24M | 1.06B | 892.38M | Gross Profit |
| 1.04B | 890.16M | 861.27M | 1.05B | 878.62M | EBIT |
| 1.00B | 761.27M | 390.28M | 564.88M | 452.25M | EBITDA |
| 947.11M | 810.84M | 722.69M | 906.89M | 782.18M | Net Income Common Stockholders |
| 406.33M | 242.18M | 426.93M | 416.74M | 159.33M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 518.34M | 442.81M | 297.10M | 20.53M | 163.53M | Total Assets |
| 9.90B | 9.12B | 9.41B | 9.64B | 9.50B | Total Debt |
| 4.84B | 5.07B | 5.29B | 5.25B | 5.17B | Net Debt |
| 4.32B | 4.62B | 4.99B | 5.23B | 5.01B | Total Liabilities |
| 5.17B | 5.36B | 5.60B | 5.53B | 5.46B | Stockholders Equity |
| 4.54B | 3.57B | 3.61B | 3.91B | 3.84B |
| Cash Flow | Free Cash Flow | |||
| 749.43M | 617.74M | 578.51M | 627.07M | 633.14M | Operating Cash Flow |
| 749.43M | 617.74M | 625.73M | 722.14M | 708.26M | Investing Cash Flow |
| -671.16M | -770.00K | 442.85M | -524.17M | -89.06M | Financing Cash Flow |
| 26.32M | -473.31M | -789.45M | -341.12M | -485.55M |
Omega Healthcare Technical Analysis
Positive
37.38
Price Trends
36.77
Positive
38.08
Negative
36.36
Positive
Market Momentum
0.06
Negative
55.69
Neutral
85.18
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OHI, the sentiment is Positive. The current price of 37.38 is above the 20-day moving average (MA) of 36.64, above the 50-day MA of 36.77, and above the 200-day MA of 36.36, indicating a bullish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 55.69 is Neutral, neither overbought nor oversold. The STOCH value of 85.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OHI.
Omega Healthcare Risk Analysis
Omega Healthcare disclosed 36 risk factors in its most recent earnings report. Omega Healthcare reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Omega Healthcare Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $98.70B | 186.70 | 1.65% | 1.67% | 20.40% | 57.80% | |
76 Outperform | $10.38B | 24.52 | 8.96% | 7.27% | 9.90% | 56.41% | |
65 Neutral | $6.01B | ― | -12.50% | 7.24% | -5.62% | -140.10% | |
63 Neutral | $3.95B | 30.94 | 4.62% | 7.14% | 7.22% | 809.92% | |
63 Neutral | $31.32B | 358.18 | 0.75% | 2.56% | 9.48% | ― | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% |
* Real Estate Sector Average
Performance Comparison
OHI
Omega Healthcare
37.38
8.68
30.24%
WELL
Welltower
153.90
64.28
71.73%
SBRA
Sabra Healthcare REIT
17.03
4.10
31.71%
VTR
Ventas
69.81
28.27
68.05%
HR
Healthcare Realty Trust
16.62
4.01
31.80%
Omega Healthcare Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -0.69% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Neutral
The earnings call highlights strong revenue growth, improved financial metrics, and a successful acquisition strategy, particularly in the UK. However, it also notes ongoing challenges with staffing and regulatory uncertainties, as well as the bankruptcy proceedings of a major operator. While the positive aspects are significant, the presence of notable challenges balances the sentiment.Highlights
Revenue Increase
Fourth quarter revenue was $279 million, up from $239 million in the fourth quarter of 2023, marking a significant year-over-year increase.
Strong FFO Performance
NAREIT FFO for the fourth quarter was $196 million or $0.68 per share compared to $129 million or $0.50 per share for the fourth quarter of 2023.
Low Leverage
Net funded debt to annualized adjusted normalized EBITDA was 3.96 times, the lowest leverage in ten years.
Active Acquisition Pipeline
Omega completed $340 million in new investments in Q4 and maintains a robust acquisition pipeline for 2025.
UK Investment Success
In 2024, Omega made over $782 million in new investments in the UK, which was 68% of total new investments.
Lowlights
Occupancy and Staffing Challenges
While occupancy is approaching pre-COVID levels, staffing shortages and regulatory uncertainties remain ongoing challenges.
Bankruptcy Proceedings
Major operator Lavie is engaged in restructuring activity and continues to work towards exiting bankruptcy.
Uncertainty in Legislative Environment
Potential changes in Medicaid and staffing mandates present uncertainties, with some lawsuits pending.
Company Guidance
During Omega Healthcare Investors' fourth-quarter 2024 earnings call, the company provided guidance for 2025, projecting adjusted FFO between $2.90 and $2.98 per share. The guidance considers factors such as the issuance of shares, which impacted FFO per share by less than one penny while reducing leverage to below 4.0 times debt to EBITDA, the lowest in a decade. The company completed $340 million in new investments during the fourth quarter, funded by issuing eleven million shares at $40.19 per share, bolstering their balance sheet. Omega ended January with over $240 million in cash and full borrowing capacity of a $1.45 billion credit facility, with an additional $820 million available under an ATM program. The company noted a strong acquisition pipeline, particularly in the UK, and highlighted a target leverage range of 4.5 to 4.75 times. They also discussed operator performance improvements, with EBITDAR coverage increasing to 1.5 times. Omega plans to repay $230 million of secured debt in November 2025, with a focus on maintaining favorable equity currency for future investments.Omega Healthcare Corporate Events
Executive/Board Changes
Omega Healthcare Announces Leadership Changes for 2025
Neutral
Jan 6, 2025
Omega Healthcare Investors, Inc. has announced leadership changes effective January 1, 2025, with Matthew Gourmand appointed as President and Vikas Gupta as Chief Investment Officer. These appointments are part of Omega’s ongoing succession planning, aiming to drive future growth. Additionally, Dan Booth, after 23 years as Chief Operating Officer, will transition to a consulting role for one year, ensuring a smooth handover of responsibilities.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.