Omega Announces Second Quarter 2013 Financial Results; Adjusted FFO of $0.62 Per Share for the Secon

Omega Announces Second Quarter 2013 Financial Results; Adjusted FFO of $0.62 Per Share for the Second Quarter

HUNT VALLEY, Md.--(BUSINESS WIRE)-- Omega Healthcare Investors, Inc. (NYS: OHI) (the "Company" or "Omega") today announced its results of operations for the three- and six-month period ended June 30, 2013. The Company also reported Funds From Operations ("FFO") available to common stockholders for the three-month period ended June 30, 2013 of $82.4 million or $0.70 per common share. The $82.4 million of FFO available to common stockholders for the second quarter of 2013 includes an $11.1 million gain related to the early extinguishment of debt, $1.5 million of non-cash stock-based compensation expense and a $65 thousand provision for uncollectible straight-line accounts receivable. The $11.1 million interest refinancing adjustment (gain) is related to the write-off of the remaining fair market value debt adjustment on 11 mortgage loans the Company paid off in May 2013. FFO is presented in accordance with the guidelines for the calculation and reporting of FFO issued by the National Association of Real Estate Investment Trusts ("NAREIT"). Normalized or Adjusted FFO was $0.62 per common share for the three-month period ended June 30, 2013. FFO and Adjusted FFO are non-GAAP financial measures. Normalized or Adjusted FFO is calculated as FFO available to common stockholders excluding the impact of certain non-cash items and certain items of revenue or expense, including, but not limited to: acquisitions, refinancing interest expenses, provisions for uncollectible accounts receivable and stock-based compensation expense. For more information regarding FFO and Adjusted FFO, see the "Second Quarter 2013 Results - Funds From Operations" section below.

GAAP NET INCOME


For the three-month period ended June 30, 2013, the Company reported net income available to common stockholders of $49.1 million, or $0.42 per diluted common share, on operating revenues of $102.5 million. This compares to net income available to common stockholders of $30.6 million, or $0.29 per diluted common share, on operating revenues of $83.8 million, for the same period in 2012.

For the six-month period ended June 30, 2013, the Company reported net income available to common stockholders of $87.2 million, or $0.76 per diluted common share, on operating revenues of $204.3 million. This compares to net income available to common stockholders of $56.7 million, or $0.54 per diluted common share, on operating revenues of $168.3 million, for the same period in 2012.

The year-to-date increase in net income was primarily due to: (i) additional rental income and mortgage interest income associated with approximately $510 million of new investments made since the second quarter of 2012 and (ii) an $11.1 million interest refinancing adjustment (gain) recorded in the second quarter of 2013. These increases to net income were partially offset by (i) increased expenses associated with new investments made throughout 2012 and 2013, including: (a) $9.8 million in increased depreciation expense and (b) $3.6 million in increased interest expense and (ii) $5.4 million in interest refinancing costs relating to 2012 refinancing activities.

SECOND QUARTER 2013 HIGHLIGHTS AND OTHER RECENT DEVELOPMENTS

  • In July 2013, the Company increased its quarterly common stock dividend to $0.47 per share.

  • In Q2 2013, the Company paid off $51 million of long-term debt.

  • In Q2 2013, the Company completed $25 million of new investments.

  • In Q2 2013, the Company completed $10 million of capital renovation projects.

  • In April 2013, the Company increased its quarterly common stock dividend to $0.46 per share.

SECOND QUARTER 2013 RESULTS

Operating Revenues and Expenses - Operating revenues for the three-month period ended June 30, 2013 were $102.5 million. Operating expenses for the three-month period ended June 30, 2013 totaled $37.8 million and were comprised of $32.2 million of depreciation and amortization expense, $4.0 million of general and administrative expense, $1.5 million of stock-based compensation expense and a $65 thousand provision for uncollectible straight-line accounts receivable.

Other Income and Expense - Other income and expense for the three-month period ended June 30, 2013 was a net expense of $14.5 million, which was comprised of $25.0 million of interest expense and $0.7 million of amortized deferred financing costs. The Company also recorded an $11.1 million interest refinancing adjustment (gain) related to the write-off of the remaining fair market value debt adjustment on 11 mortgage loans that the Company paid off in May 2013.

Funds From Operations - For the three-month period ended June 30, 2013, reportable FFO available to common stockholders was $82.4 million, or $0.70 per common share on 117 million weighted-average common shares outstanding, compared to $55.8 million, or $0.53 per common share on 106 million weighted-average common shares outstanding, for the same period in 2012.

The $82.4 million of FFO for the three-month period ended June 30, 2013 includes the impact of the $11.1 million interest refinancing adjustment (gain), $1.5 million of stock-based compensation expense and the $65 thousand provision for uncollectible straight-line accounts receivable.

The $55.8 million of FFO for the three-month period ended June 30, 2012 includes the impact of the $1.7 million interest refinancing adjustment (gain), $1.5 million of stock-based compensation expense and $0.1 million of expense associated with recently completed acquisitions.

Adjusted FFO was $72.9 million, or $0.62 per common share, for the three months ended June 30, 2013, compared to $55.7 million, or $0.53 per common share, for the same period in 2012. The Company had 11.0 million additional weighted-average shares outstanding for the three months ended June 30, 2013 compared to the same period in 2012. For further information see "Funds From Operations" below.

FINANCING ACTIVITIES

$51 Million HUD Mortgage Payoffs - On May 31, 2013, the Company paid approximately $51 million to retire 11 mortgage loans guaranteed by the Department of Housing and Urban Development ("HUD"). The loans were assumed as part of the June 2010 purchase of 40 skilled nursing facilities ("SNFs") from affiliates of CapitalSource, Inc. and had a blended interest rate of 6.61% per annum with maturities between January 2036 and May 2040. The payoff resulted in an $11.1 million gain on the extinguishment of the debt due to the write-off of the remaining fair market value adjustment offset by a prepayment fee of $0.2 million.

Equity Shelf Program and Dividend Reinvestment and Common Stock Purchase Plan - During the six-month period ended June 30, 2013, the Company sold the following shares of its common stock under its Equity Shelf Programs and its Dividend Reinvestment and Common Stock Purchase Plan:

Equity Shelf (At-The-Market) Program for 2013

(in thousands, except price per share)

Q1

Q2

Year

Total

Total

To Date

Number of shares

2,440

839

3,279

Average price per share

$

28.95

$

35.74

$

30.69

Gross proceeds

$

70,643

$

29,999

$

100,642

Dividend Reinvestment and Common Stock Purchase Program for 2013

(in thousands, except price per share)

Q1

Q2

Year

Total

Total

To Date

Number of shares

1,315

147

1,462

Average price per share

$

27.63

$

35.89

$

28.46

Gross proceeds

$

36,343

$

5,280

$

41,623

2013 PORTFOLIO AND RECENT DEVELOPMENTS

$25 Million Mezzanine Loan - On May 2, 2013, the Company invested $24.9 million in a mezzanine loan with a third party. The loan bears interest at 12% per annum and matures in December 2017.

$10 Million of Capital Renovation Projects in Q2 2013 - For the three-month period ending June 30, 2013, the Company invested approximately $10 million under its capital renovation programs.

Facility Sales - For the three-month period ended June 30, 2013, the Company sold one facility in Texas for total cash proceeds of $2.2 million, resulting in a loss on sale of $1.2 million.

DIVIDENDS

On July 17, 2013,the Company's Board of Directors announced a common stock dividend of $0.47 per share, increasing the quarterly common dividend by $0.01 per share over the prior quarter, to be paid August 15, 2013 to common stockholders of record on July 31, 2013.

2013 ADJUSTED FFO AND ADJUSTED FAD GUIDANCE

The Company revised its 2013 Adjusted FFO available to common stockholders to be between $2.48 and $2.51 per diluted share and its 2013 Adjusted Funds Available For Distribution ("FAD") available to common stockholders to be between $2.23 and $2.26 per diluted share.

The Company's Adjusted FFO and Adjusted FAD guidance for 2013 includes approximately $200 million of new investments (including capital renovation projects); however, it excludes the impact of gains and losses from the sale of assets, additional divestitures, certain revenue and expense items, interest refinancing expense, capital transactions and stock-based compensation expense. A reconciliation of the Adjusted FFO and FAD guidance to the Company's projected GAAP earnings is provided on schedules attached to this press release. The Company may, from time to time, update its publicly announced Adjusted FFO and FAD guidance, but it is not obligated to do so.

The Company's Adjusted FFO and FAD guidance is based on a number of assumptions, which are subject to change and many of which are outside the Company's control. If actual results vary from these assumptions, the Company's expectations may change. Without limiting the generality of the foregoing, the timing and completion of acquisitions, divestitures, capital and financing transactions, and variations in restricted stock amortization expense may cause actual results to vary materially from our current expectations. There can be no assurance that the Company will achieve its projected results.

CONFERENCE CALL

The Company will be conducting a conference call on Thursday, August 1, 2013, at 10 a.m. Eastern to review the Company's 2013 second quarter results and current developments. Analysts and investors within the United States interested in participating are invited to call (888) 317-6016. The Canadian toll-free dial-in number is (855) 669-9657. All other international participants can use the dial-in number (412) 317-6016. Ask the operator to be connected to the "Omega Healthcare's Second Quarter 2013 Earnings Call."

To listen to the conference call via webcast, log on to www.omegahealthcare.com and click the "earnings call" icon on the Company's home page. Webcast replays of the call will be available on the Company's website for two weeks following the call.

The Company is a real estate investment trust investing in and providing financing to the long-term care industry. At June 30, 2013, the Company owned or held mortgages on 477 skilled nursing facilities, assisted living facilities and other specialty hospitals with approximately 55,075 licensed beds (52,890 available beds) located in 33 states and operated by 47 third-party healthcare operating companies.

This announcement includes forward-looking statements, including without limitation the information under the heading "2013 Adjusted FFO and Adjusted FAD Guidance Confirmed."Actual results may differ materially from those reflected in such forward-looking statements as a result of a variety of factors, including, among other things: (i) uncertainties relating to the business operations of the operators of the Company's properties, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; (ii) regulatory and other changes in the healthcare sector; (iii) changes in the financial position of the Company's operators; (iv) the ability of any of the Company's operators in bankruptcy to reject unexpired lease obligations, modify the terms of the Company's mortgages and impede the ability of the Company to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor's obligations; (v) the availability and cost of capital; (vi) changes in the Company's credit ratings and the ratings of its debt securities; (vii) competition in the financing of healthcare facilities; (viii) the Company's ability to maintain its status as a real estate investment trust; (ix) the Company's ability to manage, re-leaseor sell any owned and operated facilities; (x) the Company's ability to sell closed or foreclosed assets on a timely basis and on terms that allow the Company to realize the carrying value of these assets; (xi) the effect of economic and market conditions generally, and particularly in the healthcare industry; and (xii) other factors identified in the Company's filings with the Securities and Exchange Commission. Statements regarding future events and developments and the Company's future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements.The Company undertakes no obligation to update any forward-looking statements contained in this announcement.

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30,

December 31,

2013

2012

(Unaudited)

ASSETS

Real estate properties

Land and buildings

$

3,051,363

$

3,038,553

Less accumulated depreciation

(643,514

)

(580,373

)

Real estate properties - net

2,407,849

2,458,180

Mortgage notes receivable - net

241,254

238,621

2,649,103

2,696,801

Other investments - net

74,646

47,339

2,723,749

2,744,140

Assets held for sale - net

1,020

1,020

Total investments

2,724,769

2,745,160

Cash and cash equivalents

7,039

1,711

Restricted cash

40,127

36,660

Accounts receivable - net

138,059

125,180

Other assets

69,802

73,294

Total assets

$

2,979,796

$

2,982,005

LIABILITIES AND STOCKHOLDERS' EQUITY

Revolving line of credit

$

5,000

$

158,000

Term loan

200,000

100,000

Secured borrowings

301,526

366,538

Unsecured borrowings - net

1,200,139

1,200,394

Accrued expenses and other liabilities

135,835

145,744

Total liabilities

1,842,500

1,970,676

Stockholders' equity:

Common stock $.10 par value authorized - 200,000 shares issued and outstanding 117,152 shares as of June 30, 2013 and 112,393 as of December 31, 2012

11,715

11,239

Common stock - additional paid-in capital

1,807,201

1,664,855

Cumulative net earnings

841,306

754,128

Cumulative dividends paid

(1,522,926

)

(1,418,893

)

Total stockholders' equity

1,137,296

1,011,329

Total liabilities and stockholders' equity

$

2,979,796

$

2,982,005

OMEGA HEALTHCARE INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

June 30,

2013

2012

2013

2012

Revenue

Rental income

$

93,069

$

75,228

$

186,178

$

151,203

Mortgage interest income

7,435

7,404

14,781

14,740

Other investment income - net

1,860

1,165

3,166

2,295

Miscellaneous

151

28

151

102

Total operating revenues

102,515

83,825

204,276

168,340

Expenses

Depreciation and amortization

32,225

27,199

64,184

54,346

General and administrative

4,011

3,468

7,756

7,509

Stock-based compensation expense

1,472

1,486

2,924

2,971

Acquisition costs

9

98

143

203

Impairment loss on real estate properties

-

-

-

272

Provisions for uncollectible mortgages, notes and accounts receivable

65

-

65

-

Total operating expenses

37,782

32,251

75,072

65,301

Income before other income and expense

64,733

51,574

129,204

103,039

Other income (expense)

Interest income

14

9

17

16

Interest expense

(24,952

)

(24,009

)

(50,624

)

(46,976

)

Interest - amortization of deferred financing costs

(698

)

(668

)

(1,380

)

(1,297

)

Interest - refinancing gain (costs)

11,112

1,698

11,112

(5,410

)

Total other expense

(14,524

)

(22,970

)

(40,875

)

(53,667

)

Income before (loss) gain on assets sold

50,209

28,604

88,329

49,372

(Loss) gain on assets sold - net

(1,151

)

1,968

(1,151

)

7,284

Net income available to common stockholders

$

49,058

$

30,572

$

87,178

$

56,656

Income per common share available to common shareholders:

Basic:

Net income

$

0.42

$

0.29

$

0.76

$

0.54

Diluted:

Net income

$

0.42

$

0.29

$

0.76

$

0.54

Dividends declared and paid per common share

$

0.46