Omega Healthcare Investors has returned to its core growth strategy with a burst of early third-quarter deals, including the addition of 61 skilled nursing facilities. The company highlighted a 2.4% increase in Medicaid reimbursement and optimism about the new Patient-Driven Payment Model during a Wednesday conference call on second quarter earnings.

Officials outlined new deals that included the purchase of 58 skilled nursing facilities and two assisted living facilities for $735 million. When closed, the deal will add 6,590 operating beds in eight states, each facility leased to one of two operators in three triple-net leases. The new facilities are projected to generate $64 million in rent in 2020.

While Omega did not disclose the seller, officials told an investor that it would be fair to assume the activity was anchored in the Southeast.

Omega also announced Wednesday it had invested $24.9 million early in July to pick up three SNFs from an unrelated third party. Those buildings, with 320 beds combined, are in Virginia and North Carolina. The company said they were added to an existing operator’s master lease with an initial cash yield of 9.5% and 2% annual escalators. 

At the end of the second quarter, the company had 930 facilities operated by 75 different partners and is approaching 93,000 beds in 40 states and the United Kingdom.

“We’ve been clear in our intention to move back to our traditional accretic growth model in 2019,” Chief Executive Officer Taylor Pickett said. “We are executing on that plan.”

Taylor also said that 2019 deals amounting to about $1.5 billion “were more than an average year,” but there are “a lot of reasons to believe we might see similar things in 2020.”

In a release issued Tuesday evening, Omega said its optimism was fueled by PDPM. The upcoming payment change will “align quality of care and patient outcomes with operator reimbursement and our operators are well prepared for the change.”

Omega’s confidence in the skilled nursing sector follows a second quarter in which the company completed its $623 million acquisition of fellow nursing home landlord MedEquities and invested $55 million in capital renovation and construction projects.

Operating revenues for the quarter ended June 30 totaled $225.3 million. Among the company’s continuing weak points are its partnerships with providers in low-reimbursement states. The company is nearing completion of a second-quarter deal to divest itself of 10 Diversicare Healthcare Services skilled nursing facilities in Kentucky for approximately $84.5 million.

Omega said it is still fine-tuning its approach in Texas, where operator Daybreak Venture has struggled in the face of “woefully low” Medicaid payments. Although Omega updated a settlement with Daybreak to provide lease relief in the first two quarters of 2019, Daybreak has been unable to provide Omega any income so far in the third quarter. Omega lowered its expectations and estimates $3 million to $5 million in Daybreak rent payments “for the foreseeable future,” according to Chief Operating Officer Dan Booth.

Officials said there could be more Texas dispositions in the back half of 2019 as Omega tries to get operators out of states where “maybe they shouldn’t be.” A third-party consultant is currently studying state-specific strategies in light of the state’s failure to pass a Medicaid rate increase this session.

Omega said it is also focused on building its senior living pipeline, with Pickett saying that he wants to “turbocharge” an existing relationship with Maplewood Senior Living.