Omega Healthcare Investors is relying on the overall strength of its portfolio as the company copes with several operators that have failed to pay rent in recent months due to pandemic conditions.
Omega executives detailed the challenges and accompanying solutions during a first quarter earnings call Tuesday morning. Omega’s revenue for the first quarter of 2022 was $249.3 million — a sharp decrease from the $273.8 million reported during last year’s first quarter.
Executives said the drop stems from operators Gulf Coast Health Care, Agemo Holdings and Guardian Healthcare, which have all struggled to meet their rent obligations in recent months. The company has taken several steps to help them, including rent deferrals, restructuring and asset sales.
Also, during the quarter Omega completed the sale of a majority of Gulf Coast’s portfolio for $318 million. The net proceeds from the deal offset lost contractual revenue from the operator, said Omega CEO C. Taylor Pickett on Tuesday.
“These challenges may continue for the next few quarters as we work through similar issues with other operators,” Pickett said in a statement. “We continue to believe that the strong appetite for skilled nursing assets and secular tailwinds continue to exist for this industry.”
Occupancy rebound
Occupancy for Omega’s SNF portfolio bounced back during the first quarter of 2022 after trending downward in December and January.
The company’s occupancy reached 77.9% as of mid-April — up 300 basis points from January when it was 74.9%.
Despite the occupancy gains, executives said staffing shortages and elevated costs continued to pressure operating cash flows and the ability to admit new residents.
“At this point, it is impossible to predict how quickly industry occupancy will fully recover or how rapidly the current labor force pressures will subside,” Pickett said.
