Omega Healthcare Investors Inc.
02/09/2026 | Press release | Distributed by Public on 02/09/2026 09:59
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based primarily on the Consolidated Financial Statements of Omega Healthcare Investors, Inc. presented in conformity with U.S. generally accepted accounting principles ("GAAP") for the periods presented and should be read together with the notes thereto contained in this Annual Report on Form 10-K. Other important factors are identified in "Forward-Looking Statements" and "Item 1A - Risk Factors" above.
Our Management's Discussion and Analysis of Financial Condition and Results of Operations is organized as follows:
| ● | Business Overview |
| ● | Outlook, Trends and Other Conditions |
| ● | 2025 and Recent Highlights |
| ● | Results from Operations |
| ● | Funds from Operations |
| ● | Liquidity and Capital Resources |
| ● | Supplemental Guarantor Information |
| ● | Critical Accounting Policies and Estimates |
Business Overview
Omega Healthcare Investors, Inc. ("Parent") is a Maryland corporation that, together with its consolidated subsidiaries has elected to be taxed as a REIT for federal income tax purposes. Omega is structured as an umbrella partnership REIT ("UPREIT") under which all of Omega's assets are owned directly or indirectly by, and all of Omega's operations are conducted directly or indirectly through, its operating partnership subsidiary, Omega OP. As of December 31, 2025, Parent owned approximately 95% of the issued and outstanding units of partnership interest in Omega OP ("Omega OP Units"), and other investors owned approximately 5% of the outstanding Omega OP Units.
Omega has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States ("U.S."), the United Kingdom ("U.K.") and Canada. Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities ("SNFs"), assisted living facilities ("ALFs") (including care homes in the U.K.), and to a lesser extent, independent living facilities ("ILFs"), rehabilitation and acute care facilities ("specialty facilities") and continuing care retirement community ("CCRCs"). Our core portfolio consists of our long-term leases and real estate loans with healthcare operating companies and affiliates (collectively, our "operators"). Real estate loans consist of mortgage loans and other real estate loans that are primarily collateralized by a first, second or third mortgage lien or a leasehold mortgage on, or an assignment of the partnership interest in the related properties. Additionally, during the fourth quarter of 2025, we began utilizing the structure authorized by the REIT Investment Diversification and Empowerment Act of 2007 (commonly referred to as "RIDEA"), whereby we own and operate healthcare facilities through third-party managers (collectively, our "managers"). In addition to our core investments, we make loans to operators and/or their principals. These loans, which may be either unsecured or secured by the collateral of the borrower, are classified as non-real estate loans. From time to time, we also acquire equity interests in joint ventures or entities that support the long-term healthcare industry and our operators, which may include ancillary service or technology companies, and in operating companies.
As of December 31, 2025, our portfolio of real estate investments consisted of 1,027 operating healthcare facilities (including properties associated with mortgages, assets held for sale and consolidated joint ventures), along with other real estate loans receivable (excluding mortgages) of $482.6 million and $414.1 million of investments in 15 unconsolidated entities. These healthcare facilities are located in 42 states, Washington, D.C., the U.K. and the Bailiwick of Jersey ("Jersey"), and are operated or managed by 89 third-party operators or managers. Our investment in these facilities, net of impairments and allowances, totaled approximately $10.5 billion at December 31, 2025, with approximately 98% of our real estate investments related to long-term healthcare facilities. Our portfolio is made up of (i) 561 SNFs, 339 ALFs, 19 ILFs, 16 specialty facilities and one CCRC, (ii) fixed rate mortgages on 47 SNFs, 42 ALFs and two ILFs and (iii) one property adjacent to one of our existing facilities that is held for sale. At December 31, 2025, our total investments also include non-real estate loans receivable of $330.3 million, consisting primarily of secured loans to third-party operators of our facilities.
As healthcare delivery continues to evolve, we continuously evaluate potential investments, our assets, operators and markets to position our portfolio for long-term success. As part of our evaluation, we may from time to time consider selling or transitioning assets that do not meet our portfolio criteria.
Outlook, Trends and Other Conditions
Our operators continue to face a number of industry challenges, including staffing shortages in certain regions, which have persisted since the COVID-19 pandemic. In addition, our operators have been and continue to be adversely affected by inflation-related cost increases and may be adversely impacted by recently announced global tariffs, each of which may increase expenses, exacerbate labor shortages and increase labor costs, among other adverse impacts. Our operators also may be adversely impacted by immigration restrictions and changes to immigration enforcement policy to the extent they contribute to labor shortages. There continues to be uncertainty regarding the extent and duration of these impacts for those operators, particularly given uncertainty as to whether reimbursement increases from the federal government, the states and the U.K. will be effective in offsetting these incremental costs and lost revenues. In addition, there remains uncertainty as to the impact of recent and potential further regulatory changes, including the recent Medicaid changes in the One Big Beautiful Bill Act ("OBBBA") and potential further reforms to Medicaid or Medicare and other state regulatory initiatives. While the OBBBA does not directly lower reimbursements related to long term care providers, it may indirectly impact our operators to the extent states in which they operate reduce reimbursement levels generally. This may occur as a result of reduced Medicaid funds allocated by states to long-term care providers due to lower reimbursement levels for hospitals and other healthcare providers. We continue to monitor these reimbursement impacts as well as the impacts of other regulatory changes, as discussed below, which could have a material adverse effect on an operator's results of operations and financial condition, which could adversely affect the operator's ability to meet its obligations to us. See "Government Regulation and Reimbursement" for additional information. While we continue to believe that longer term demographics will drive increasing demand for needs-based skilled nursing care, we remain cautious as some of the long-term impacts noted above may continue to have an impact on certain of our operators and their financial conditions.
2025 and Recent Highlights
Investments
| ● | We acquired 71 facilities for total consideration of $690.4 million in 2025, including four facilities that we own and operate utilizing a RIDEA structure. See Note 3 - Real Estate Asset Acquisitions and Development to the Consolidated Financial Statements for additional information. |
| ● | We invested $114.5 million under our construction in progress and capital improvement programs in 2025. In February 2025, we placed the $201.8 million Inspir Embassy Row construction in progress project into service and began recognizing rental income from the facility. |
| ● | We funded $65.4 million under 19 new real estate loans originated during 2025 with a weighted average interest rate of 10.3% in 2025. We also advanced $17.3 million under existing real estate loans in 2025. We received principal repayments of $115.7 million on real estate loans during 2025. We committed to fund up to $87.6 million Canadian dollars for a real estate loan for the development of several long-term care facilities in Canada that executed in December 2025, which will be our first transaction in Canada. |
| ● | In October 2025, the Company formed a JV with affiliates of Saber Healthcare Holdings, LLC ("Saber") to own and lease 64 facilities that were previously wholly owned by affiliates of Saber. The Company issued approximately 5.5 million Omega OP Units with a fair value of $222.4 million in exchange for a 49% equity interest in the JV. |
| ● | In December 2025, the Company formed two JVs to own and operate, through a RIDEA structure, a CCRC in North Carolina. The Company acquired a 49% equity interest in each of the JVs for aggregate consideration of $42.7 million. |
Dispositions and Impairments
| ● | In 2025, we sold 49 facilities (45 SNFs and four ALFs) for approximately $282.8 million in net cash proceeds, recognizing a net gain of approximately $67.3 million. |
| ● | In 2025, we recorded impairments on real estate properties of approximately $22.6 million on eight facilities. Of the $22.6 million, $6.3 million related to two facilities that were classified as held for sale and $16.3 million related to six held for use facilities. |
Financing Activities
| ● | We repaid $400 million of 4.50% senior notes on the January 15, 2025 maturity date using available cash. |
| ● | Omega repaid the $50 million term loan ("OP Term Loan") on April 29, 2025, prior to its original maturity date. |
| ● | On June 6, 2025, Omega amended its charter to increase the number of authorized shares of Omega common stock from 350.0 million to 700.0 million. |
| ● | On June 20, 2025, the Company issued $600 million of Senior Notes due 2030 (the "2030 Senior Notes") that mature on July 1, 2030 and bear interest at a fixed rate of 5.200% per annum, payable semi-annually on January 1 and July 1 of each year, commencing on January 1, 2026. The 2030 Senior Notes were sold at an issue price of 99.118% of their face value, resulting in a discount of $5.3 million. We incurred $5.6 million of deferred costs in connection with the issuance. |
| ● | On September 30, 2025, the Company entered into a new credit agreement consisting of a new four-year $2.0 billion senior unsecured multicurrency revolving credit facility (the "Revolving Credit Facility") and a three-year $300.0 million delayed draw term loan facility (the "2028 Term Loan"), replacing our previous $1.45 billion senior unsecured 2021 multicurrency revolving credit facility (the "2021 Revolving Credit Facility") that was scheduled to mature on October 30, 2025. |
| ● | On October 15, 2025, the Company redeemed, at par value, the $600.0 million of 5.250% Senior Notes with a scheduled maturity of January 15, 2026. |
| ● | During the fourth quarter of 2025, we terminated our 2021 $1.25 billion At-The-Market Offering Program (the "2024 ATM Program") and entered into a new ATM Equity Offering Sales Agreement pursuant to which shares of common stock having an aggregate gross sale price of up to $2.00 billion (the "2025 ATM Program," and together with the 2024 ATM Program, the "ATM Program") may be sold from time to time. In 2025, we sold 16.3 million shares of common stock under our ATM Program and Dividend Reinvestment and Common Stock Purchase Plan ("DRCSPP"), generating aggregate gross proceeds of $612.1 million. |
| ● | During the fourth quarter of 2025, we fully repaid the $428.5 million term loan (the "2026 Term Loan") prior to the August 8, 2026 maturity date. In connection with this repayment, we redesignated nine of the interest rate swaps, with $300 million of notional value, as hedges against our exposure to changes in interest payment cash flows on the 2028 Term Loan. We terminated two of the interest rates swaps with notional value of $128.5 million and paid our swap counterparty $1.7 million. |
Other Highlights
| ● | During 2025, we advanced $17.5 million under seven new non-real estate loans originated during 2025 with a weighted average interest rate of 11.9%. We also advanced $37.9 million under existing non-real estate loans during 2025. We received principal repayments of $68.1 million on non-real estate loans during 2025. |
Collectibility Issues
| ● | During the year ended December 31, 2025, we placed three operators on a cash basis of revenue recognition. We recognized straight-line rent receivable write-offs of $15.5 million for the year ended December 31, 2025 in connection with placing certain operator leases on a cash basis of revenue recognition. Several of the operator leases placed on a cash basis of revenue recognition in the comparative years related to new operator leases, so there were no related straight-line rent receivable write-offs associated with these operator leases. We provided one cash basis operator with a lease inducement of $10.0 million in connection with an execution of a new lease, which was recorded as a reduction to the rental income recognized for the three months ended March 31, 2025. As of December 31, 2025, we had 20 operator leases on a cash basis for revenue recognition, which represent 19.0% and 19.9% of our total revenues for the years ended December 31, 2025 and 2024, respectively. |
| ● | As discussed in Note 5 - Contractual Receivables and Other Receivables and Lease Inducements, in the fourth quarter of 2025, we received the final regulatory approvals related to the licensure of the operating assets, and the transition of the equity of Maplewood Senior Living (along with affiliates "Maplewood") from the Greg Smith estate to Maplewood's key management team members was completed. Concurrently with the transition of the equity to the Key Principals, on December 11, 2025, Omega entered into a restructuring agreement and amended its master lease agreement for 17 facilities (the "Master Lease") and its revolving credit facility with Maplewood (the "Maplewood Revolver"). As part of the restructuring agreement and amendments, Omega and Maplewood agreed, among other terms, to (i) reinstate the 2.5% annual contractual rent escalators that were allowed to be deferred as part of the 2023 restructuring agreement terms, resulting in contractual rent of $76.5 million for 2026 for the 17 facilities under the Master Lease, increasing annually by 2.5% thereafter, (ii) allow for the deferral of monthly rent (with 5% interest if outstanding longer than 18 months) if certain conditions are met, but require a minimum amount of contractual rent to be paid annually including $62.1 million for 2026 and $70.0 million for 2027, increasing annually by 2.5% thereafter, (iii) provide up to $43.0 million of incentive payments payable to Maplewood based on achievement of certain metrics and conditions, (iv) extend the maturity date of the Maplewood Revolver from June 2035 to June 2037, (v) retrospectively allow the payment of interest due on the Maplewood Revolver dating back to January 1, 2023 to be paid-in-kind ("PIK") and (vi) reduce Maplewood's share of any future potential sales proceeds (in excess of our gross investment) by any incentive payments made to Maplewood. The single facility lease for the Inspir Embassy Row property in Washington D.C. was not modified as part of the restructuring. During 2025, Maplewood paid total contractual rent of $58.9 million compared to the $69.3 million of contractual rent due under the lease agreement for the year after reflecting the impact of deferred escalators. These amounts do not include contractual rent and payments related to Inspir Embassy Row in Washington D.C. of $11.9 million. As Maplewood is on a cash basis of revenue recognition, we have recorded $58.9 million of revenue related to Maplewood for the year ended December 31, 2025 for the contractual rent payments that we received. In addition, prior to the amendment, Maplewood missed cash interest payments of $11.9 million due under the Maplewood Revolver. As the loan is on non-accrual status, the previously missed cash interest payments due under the loan were never recognized as interest income. Therefore, subsequent to the Maplewood Revolver amendment, the missed cash interest payments will increase the principal balance of the loan but will not be included in the amortized cost basis of the loan. As of December 31, 2025, the amortized cost basis of the Maplewood Revolver was $263.6 million, which represents 18.1% of the total amortized cost basis of all of Omega's real estate loans receivable. See Note 7 - Real Estate Loans Receivable to the Consolidated Financial Statements for more information. In January 2026, Maplewood paid $6.3 million under its lease agreements, $1.1 million of which relates to Inspir Embassy Row in Washington D.C. |
| ● | As discussed in Note 5 - Contractual Receivables and Other Receivables and Lease Inducements to the Consolidated Financial Statements, LaVie Care Centers, LLC ("LaVie") commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division in June 2024. On December 5, 2024, a plan of reorganization was confirmed by the Bankruptcy Court, pursuant to which the LaVie master lease agreement will be assumed and assigned by certain of the debtor(s) to operators designated by the Plan Sponsor upon the effective date of the plan. The plan of reorganization was made effective on May 1, 2025, which resulted in the LaVie master lease agreement being assumed by and assigned to ENDMT LLC ("Avardis") and subsequently amended and restated. The amended master lease has a lease term ending December 31, 2037 and requires monthly rent payments of $3.1 million, which escalate 2.5% annually. During the first and second quarters of 2025, LaVie paid full contractual rent of $15.5 million through the date the plan of reorganization became effective. Since assuming the lease, Avardis has paid full contractual rent of $21.9 million in the year ended December 31, 2025. Avardis is on a straight-line basis for rental income recognition, and we recognized $25.5 million of rental income related to Avardis for the year ended December 31, 2025. We did not recognize any interest income related to LaVie during the year ended December 31, 2025 as the three loans outstanding have PIK interest and are on non-accrual status. |
| ● | As discussed in Note 5 - Contractual Receivables and Other Receivables and Lease Inducements to the Consolidated Financial Statements, in July 2025, Genesis Healthcare, Inc. ("Genesis") commenced voluntary cases under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division. Genesis will continue to operate, as a debtor-in-possession ("DIP"), the 31 facilities subject to a master lease agreement with Omega, unless and until Genesis' leasehold interest under the master lease agreement is rejected or assumed and assigned. We provided $8.0 million of a $30.0 million junior secured DIP financing, along with other lenders, to Genesis to support sufficient liquidity to, among other things, operate its facilities during bankruptcy. As a condition of the DIP financing, Genesis is required to pay Omega full contractual rent under its lease agreement. On January 14, 2026, 101 W State Street Holdings, LLC ("WSSH") was named the winning bidder in the auction to acquire Genesis' assets, and on January 26, 2026, the Bankruptcy Court approved the sale to WSSH, subject to satisfaction of the terms and conditions of the purchase and sale agreement between Genesis and WSSH. To the extent that the transaction is consummated, closing is not expected in the next 90-120 days. Genesis has not yet elected to assume and assign the Omega lease to WSSH. If the transaction closes, it is anticipated that the cash proceeds of the sale will be sufficient to repay the DIP and Omega term loans. Please see Note 8 - Non-Real Estate Loans Receivable and Note 20 - Commitments and Contingencies to the Consolidated Financial Statements for additional disclosures regarding the term loans. Since commencing the bankruptcy process in July 2025, Genesis made all required contractual rent and interest payments through the end of 2025. As Genesis is on a cash basis of revenue recognition, we recognized rental income of $51.2 million related to Genesis during the year ended December 31, 2025, which includes $47.0 million for contractual rent payments received and $4.2 million from the application of proceeds from the letter of credit in March 2025 that was held as collateral from Genesis. In addition, we recognized interest income of $17.1 million (which includes $0.1 million from the application of proceeds from the letter of credit) related to loans with Genesis during the year ended December 31, 2025. After the application of proceeds from the letter of credit, there is $3.5 million remaining under the letter of credit. As of December 31, 2025, the remaining two term loans and the DIP loan are on an accrual basis due to the collateral supporting the loans. In January 2026, Genesis paid full contractual rent and interest of $4.5 million. |
Dividends
| ● | Quarterly cash dividends paid during 2025 aggregated to $2.68 per share. On January 29, 2026, the Board declared a cash dividend of $0.67 per share.The dividend will be paid on February 17, 2026 to stockholders of record as of the close of business on February 9, 2026. |
Results of Operations
The following is our discussion of the consolidated results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. For a discussion of our results of operation for the year ended December 31, 2024 as compared to the year ended December 31, 2023, see "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-Kfor the year ended December 31, 2024 ("2024 Form 10-K").
Comparison of results of operations for the years ended December 31, 2025 and 2024 (dollars in thousands):
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Year Ended December 31, |
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2025 |
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2024 |
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Variance |
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Revenues: |
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|
|
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Rental income |
|
$ |
1,001,965 |
|
$ |
887,910 |
|
$ |
114,055 |
|
Interest income |
|
175,112 |
|
157,207 |
|
|
17,905 |
||
|
Miscellaneous income |
|
13,022 |
|
6,273 |
|
|
6,749 |
||
|
Expenses: |
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|
|
|
|
|
|
||
|
Depreciation and amortization |
|
325,247 |
|
304,648 |
|
|
20,599 |
||
|
General and administrative |
|
104,137 |
|
88,001 |
|
|
16,136 |
||
|
Real estate taxes |
|
|
14,438 |
|
|
14,561 |
|
|
(123) |
|
Acquisition, merger and transition related costs |
|
4,219 |
|
11,615 |
|
|
(7,396) |
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Impairment on real estate properties |
|
22,610 |
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23,831 |
|
|
(1,221) |
||
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Provision (recovery) for credit losses |
|
2,336 |
|
(15,483) |
|
|
17,819 |
||
|
Interest expense |
|
215,035 |
|
221,716 |
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|
(6,681) |
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Other income (expense): |
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Other income - net |
|
50,058 |
|
6,826 |
|
|
43,232 |
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Gain (loss) on debt extinguishment |
|
4,995 |
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(1,749) |
|
|
6,744 |
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Gain on assets sold - net |
|
|
67,303 |
|
|
13,168 |
|
|
54,135 |
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Income tax expense |
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(14,748) |
|
(10,858) |
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|
(3,890) |
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(Loss) income from unconsolidated entities |
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(218) |
|
7,916 |
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(8,134) |
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Revenues
Following is a description of certain of the changes in revenues for the year ended December 31, 2025 compared to 2024:
| ● | The increase in rental income was primarily the result of (i) a $102.8 million increase related to facility acquisitions made throughout 2024 and 2025, lease extensions and other rent escalations, (ii) a $26.1 million net increase in rental income from cash basis operators, primarily related to Maplewood, as a result of receiving higher cash rent payments period over period from these operators, (iii) a $7.1 million increase related to higher rental income from our leases with operators in the U.K. primarily due to the strengthening of the British Pound Sterling against the U.S. Dollar and (iv) a $1.9 million net increase related to impact of facility transitions, primarily from non-paying cash basis operators to straight-line basis operators. The increase was partially offset by (i) a $13.8 million decrease resulting from higher straight-line receivable write-offs in 2025 compared to 2024 and (ii) a $10.0 million lease inducement provided to a cash basis operator that was recorded as a reduction to rental income in 2025. |
| ● | The increase in interest income was primarily due to a $28.3 million increase related to new loans and additional fundings on existing loans made throughout 2024 and 2025, partially offset by a $10.3 million decrease related to principal repayments on our loans during 2024 and 2025. |
| ● | The increase in miscellaneous income was primarily the result of residual profits received related to an other real estate loan that was paid off during the fourth quarter of 2025. |
Expenses
Following is a description of certain of the changes in our expenses for the year ended December 31, 2025 compared to 2024:
| ● | The increase in depreciation and amortization expense primarily relates to facility acquisitions and capital additions, partially offset by facility sales and facilities reclassified to assets held for sale. |
| ● | The increase in general and administrative ("G&A") expense primarily relates to (i) a $6.6 million of incremental non-cash stock-based compensation expense and $2.2 million of incremental payroll expense related to the termination of the employment agreement of our former Chief Operating Officer in the first quarter of 2025, (ii) other increases in payroll and benefits and (iii) an increase in operator initiatives. Additional information is disclosed in Note 19 - Stock-Based Compensation to the Consolidated Financial Statements. |
| ● | The decrease in acquisition, merger and transition related costs primarily relates to (i) transition costs following our acquisition of the remaining 51% interest in the unconsolidated real estate joint venture owning 63 facilities in the U.K. (the "Cindat Joint Venture") in 2024 and (ii) the transition of facilities with troubled operators. |
| ● | The 2025 impairments were recognized in connection with two facilities that were classified as held for sale and six held for use facilities. The 2024 impairments were recognized in connection with six facilities that were classified as held for sale and eight held for use facilities. The 2025 and 2024 impairments were primarily the result of decisions to exit certain non-strategic facilities and/or terminate our relationships with certain non-strategic operators. |
| ● | The change in provision (recovery) for credit losses primarily relates to (i) increases in the general reserve recorded primarily resulting from increases in loss rates utilized in the estimate of expected credit losses for loans partially offset by decreases in loan balances, and a net decrease in aggregate specific provisions recorded during 2025 compared to specific provisions recorded during 2024 (see Note 9 - Allowance for Credit Losses to the Consolidated Financial Statements for a full summary of allowance movements over the last three years). |
| ● | The decrease in interest expense primarily relates to (i) a net decrease in the amortization of deferred financing fees and discounts as a result of the amortization of the fair value adjustment associated with the 2026 Mortgage Loan, (ii) the repayment of the 2026 Term Loan in December 2025, (iii) the repayment of the 2026 Mortgage Loan in November 2025, (iv) the repayment of $600 million of 5.25% senior notes in October 2025, (v) the repayment of $400 million of 4.50% senior notes in January 2025, (vi) the repayment of the OP Term Loan in April 2025, (vii) the repayment of $400 million of 4.95% senior notes in April 2024 and (viii) the payoff of all remaining HUD mortgages in the first quarter of 2024. The overall decrease was partially offset by increases due to (i) the issuance of the 2030 Senior Notes in June 2025, (ii) the funding of the 2028 Term Loan in November 2026 and (iii) the assumption of the 2026 Mortgage Loan as part of our acquisition of the remaining 51% interest in the Cindat Joint Venture in July 2024. |
Other Income (Expense)
The increase in total other income (expense) was primarily due to (i) a $54.1 million increase in gain on assets sold resulting from the sale of 49 facilities in 2025 compared to the sale of 21 facilities in 2024, (ii) a $43.2 million increase in other income - net primarily related to increased interest income on short-term investments due to higher invested cash in 2025 compared to the same period in 2024 and gains associated with foreign currency and financial instruments in 2025 and (iii) a $6.7 million increase in gain on debt extinguishment primarily related to the remaining amortized premium associated with the fair value adjustment.
Income Tax Expense
The increase in income tax expense was primarily due to an increase in taxable income in the U.K. as a result of acquisitions in 2024 and 2025.
(Loss) Income from Unconsolidated Entities
The change in (loss) income from unconsolidated entities was primarily due to one unconsolidated joint venture, which sold one facility during the third quarter of 2024 for a $12.9 million gain, $6.5 million of which represents the Company's share of the gain.
Funds From Operations
We use funds from operations ("Nareit FFO"), a non-GAAP financial measure, as one of several criteria to measure the operating performance of our business. We calculate and report Nareit FFO in accordance with the definition of Funds from Operations and interpretive guidelines issued by the National Association of Real Estate Investment Trusts ("Nareit"). Nareit FFO is defined as net income (computed in accordance with GAAP), adjusted for the effects of asset dispositions and certain non-cash items, primarily depreciation and amortization and impairment on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures and changes in the fair value of warrants. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Revenue recognized based on the application of security deposits and letters of credit or based on the ability to offset against other financial instruments is included within Nareit FFO. We believe that Nareit FFO is an important supplemental measure of our operating performance. As real estate assets (except land) are depreciated under GAAP, such accounting presentation implies that the value of real estate assets diminishes predictably over time, while real estate values instead have historically risen or fallen with market conditions. Nareit FFO was designed by the real estate industry to address this issue. Nareit FFO herein is not necessarily comparable to Nareit FFO of other REITs that do not use the same definition or implementation guidelines or interpret the standards differently from us.
We further believe that by excluding the effect of depreciation, amortization, impairment on real estate assets and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, Nareit FFO can facilitate comparisons of operating performance between periods and between other REITs. We offer this measure to assist the users of our financial statements in evaluating our financial performance under GAAP, and Nareit FFO should not be considered a measure of liquidity, an alternative to net income or an indicator of any other performance measure determined in accordance with GAAP. Investors and potential investors in our securities should not rely on this measure as a substitute for any GAAP measure, including net income.
The following table presents our Nareit FFO reconciliation for the years ended December 31, 2025, 2024 and 2023:
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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(in thousands) |
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Net income |
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$ |
609,467 |
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$ |
417,804 |
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$ |
248,796 |
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Deduct gain from real estate dispositions |
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(67,303) |
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(13,168) |
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|
(79,668) |
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Deduct gain from real estate dispositions - unconsolidated entities |
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- |
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(6,260) |
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- |
|||
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|
|
542,164 |
|
398,376 |
|
169,128 |
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Elimination of non-cash items included in net income: |
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|||
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Depreciation and amortization |
|
325,247 |
|
304,648 |
|
319,682 |
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Depreciation - unconsolidated entities |
|
8,886 |
|
7,057 |
|
10,423 |
|||
|
Impairments on real estate properties |
|
|
22,610 |
|
|
23,831 |
|
|
91,943 |
|
Nareit FFO |
|
$ |
898,907 |
|
$ |
733,912 |
|
$ |
591,176 |
Liquidity and Capital Resources
Sources and Uses
Our primary sources of cash include rental income, interest receipts, existing availability under our Revolving Credit Facility, proceeds from our DRCSPP and 2025 ATM Program, facility sales, the issuance of additional debt, including unsecured notes and term loansand proceeds from real estate loan and non-real estate loan payoffs. We anticipate that these sources will be adequate to fund our cash flow needs through the next twelve months, which include common stock dividends and distributions to noncontrolling interest members, debt service payments (including principal and interest), real estate investments (including facility acquisitions, capital improvement programs and other capital expenditures), real estate loan and non-real estate loan advances and normal recurring G&A expenses (primarily consisting of employee payroll and benefits and expenses relating to third parties for legal, consulting and audit services).
Capital Structure
At December 31, 2025, we had total assets of $10.0 billion, total equity of $5.4 billion and total debt of $4.3 billion in our Consolidated Financial Statements, with such debt representing approximately 44.1% of total capitalization.
Debt
At December 31, 2025 and 2024, the weighted average annual interest rate of our debt was 4.2% and 4.6%, respectively. Additionally, as of December 31, 2025, approximately 94% of our debt with outstanding principal balances has fixed interest payments after reflecting the impact of interest rate swaps that are designated cash flow hedges. As of December 31, 2025, Omega's debt obligations consisted of the following:
| ● | $3.8 billion of senior unsecured notes with staggered maturity dates ranging from 2027 to 2033. These notes bear fixed interest rates between 3.25% and 5.20% per annum. |
| ● | A $2.0 billion Revolving Credit Facility that bears interest at Secured Overnight Financing Rate ("SOFR") plus (i) an applicable percentage (with a range of 72.5 to 140 basis points) based on the Company's debt ratings and (ii) a facility fee based on the same ratings (with a range of 12.5 to 30 basis points). The Revolving Credit Facility matures on September 28, 2029, subject to Omega's option to extend such maturity for two consecutive six-month periods. As of December 31, 2025, Omega had $242.0 million outstanding on the Revolving Credit Facility. |
| ● | A $300.0 million 2028 Term Loan that bears interest at SOFR plus an applicable percentage (with a range of 80 to 160 basis points) based on the Company's debt ratings. The 2028 Term Loan Credit Facility matures on September 29, 2028, subject to Omega's option to extend such maturity for two consecutive twelve-months periods. We have nine interest rate swaps designated as cash flow hedges, with notional value of $300.0 million, that effectively fix the SOFR-based portion of the 2028 Term Loan interest rate at 4.019%. As of December 31, 2025, Omega had $300.0 million outstanding on the 2028 Term Loan. |
As of December 31, 2025, we had long-term credit ratings of Baa3 from Moody's and BBB- from S&P Global and Fitch. Credit ratings impact our ability to access capital and directly impact our cost of capital as well. For example, our Revolving Credit Facility accrues interest and fees at a rate per annum equal to SOFR plus a margin that depends upon our credit rating. A downgrade in credit ratings by Moody's, S&P Global and/or Fitch may have a negative impact on the interest rates and fees for our Revolving Credit Facility and 2028 Term Loan.
As of December 31, 2025, we had approximately $27.0 million of cash and cash equivalents on our Consolidated Balance Sheets and $1.8 billion of availability under our Revolving Credit Facility. Our next senior note maturity is $700 million of 4.50% senior notes that are due in April 2027. As discussed below, we also have $2.0 billion of potential sales remaining under the ATM Program. This combination of liquidity sources, along with cash from operating activities, provides us with ability to repay the debt obligations maturing in 2026. We also could elect to refinance these notes based on our evaluation of market conditions at maturity.
Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of December 31, 2025 and 2024, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings.
Equity
At December 31, 2025, we had 295,539 thousand shares of common stock outstanding, and our shares had a market value of $13.1 billion. As of December 31, 2025, we had the following equity programs in place that we can utilize to raise capital:
| ● | The 2025 ATM Program under which shares of common stock having an aggregate gross sales price of up to $2.0 billion may be sold from time to time. The 2025 ATM Program has a forward sale provision that generally allows Omega to lock in a price on the sale of shares of common stock when sold by the forward sellers but defer receiving the net proceeds from such sales until the shares of our common stock are issued at settlement on a later date. We have not utilized the forward provisions under the ATM Program. We have $2.0 billion of sales remaining under the 2025 ATM Program as of December 31, 2025. |
| ● | We have a DRCSPP that allows for the reinvestment of dividends and the optional purchase of our common stock. |
Dividends
As a REIT, we are required to distribute dividends (other than capital gain dividends) to our stockholders in an amount at least equal to (A) the sum of (i) 90% of our "REIT taxable income" (computed without regard to the dividends paid deduction and our net capital gain), and (ii) 90% of the net income (after tax), if any, from foreclosure property, minus (B) the sum of certain items of non-cash income. In addition, if we dispose of any built-in gain asset during a recognition period, we will be required to distribute at least 90% of the built-in gain (after tax), if any, recognized on the disposition of such asset. Such distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for such year and paid on or before the first regular dividend payment after such declaration. In addition, such distributions are required to be made pro rata, with no preference to any share of stock as compared with other shares of the same class, and with no preference to one class of stock as compared with another class except to the extent that such class is entitled to such a preference. To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100% of our "REIT taxable income" as adjusted, we will be subject to tax thereon at regular corporate rates.
Material Cash Requirements
The following table shows our material cash requirements, described below, as of December 31, 2025:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period |
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|
|
|
|
|
Less than |
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|
|
|
|
|
|
More than |
||
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|
|
Total |
|
1 year |
|
Years 2-3 |
|
Years 4-5 |
|
5 years |
|||||
|
|
(in thousands) |
||||||||||||||
|
Debt(1) |
|
$ |
4,292,000 |
|
$ |
- |
|
$ |
1,550,000 |
|
$ |
1,342,000 |
|
$ |
1,400,000 |
|
Interest payments on long-term debt(2) |
|
729,552 |
|
181,333 |
|
296,621 |
|
181,824 |
|
69,774 |
|||||
|
Operating lease and other obligations(3)(4) |
|
83,334 |
|
2,787 |
|
5,697 |
|
5,138 |
|
69,712 |
|||||
|
Total |
|
$ |
5,104,886 |
|
$ |
184,120 |
|
$ |
1,852,318 |
|
$ |
1,528,962 |
|
$ |
1,539,486 |
| (1) | The $4.3 billion of debt outstanding includes: (i) $700 million of 4.5% Senior Notes due April 2027, (ii) $550 million of 4.75% Senior Notes due January 2028, (iii) $500 million of 3.625% Senior Notes due October 2029, (iv) $600 million of 5.20% Senior Notes due July 2030, (v) $700 million of 3.375% Senior Notes due February 2031, (vi) $700 million of 3.25% Senior Notes due April 2033, (vii) $300.0 million under the 2028 Term Loan and (viii) $242.0 million under the Revolving Credit Facility. Parent is the obligor of all outstanding debt. |
| (2) | Based on variable interest rates in effect as of December 31, 2025 and including the impact of interest rate swaps designated as cash flow hedges. |
| (3) | Based on foreign currency exchange rates in effect as of December 31, 2025. |
| (4) | See Note 6 - Leases to our Consolidated Financial Statements for additional information. |
Capital Expenditures and Funding Commitments
In addition to the obligations in the table above, as of December 31, 2025, we also had $207.8 million of commitments to fund the construction of new facilities, capital improvements and other commitments under lease agreements. Additionally, we have commitments to fund $90.9 million of advancements under existing real estate loans and $37.4 million of advancements under existing non-real estate loans. These commitments are expected to be funded over the next several years and are dependent upon the operators' election to use the commitments.
Other Arrangements
We own interests in certain unconsolidated joint entities as described in Note 11 to the Consolidated Financial Statements - Investments in Unconsolidated Entities. Our risk of loss is generally limited to our investment in the entity and any outstanding loans receivable.
We also hold variable interests in certain unconsolidated entities through our loan and other investments. See disclosures regarding our risk of loss associated with these entities within Note 10 to the Consolidated Financial Statements - Variable Interest Entities.
We use derivative instruments to hedge interest rate and foreign currency exchange rate exposure as discussed in Note 15 to the Consolidated Financial Statements - Derivatives and Hedging.
Cash Flow Summary
The following is a summary of our sources and uses of cash flows for the year ended December 31, 2025 as compared to the year ended December 31, 2024 (dollars in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
||||
|
|
|
2025 |
|
2024 |
|
Increase/(Decrease) |
|||
|
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
$ |
878,551 |
|
$ |
749,430 |
|
$ |
129,121 |
|
Investing activities |
|
(539,792) |
|
(671,164) |
|
|
131,372 |
||
|
Financing activities |
|
(838,256) |
|
26,319 |
|
|
(864,575) |
||
For a discussion of our consolidated cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023, see "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2024 Form 10-K.
Cash, cash equivalents and restricted cash totaled $54.6 million as of December 31, 2025, a decrease of $494.2 million as compared to the balance at December 31, 2024. The following is a discussion of changes in cash, cash equivalents and restricted cash due to operating, investing and financing activities, which are presented in our Consolidated Statements of Cash Flows.
Operating Activities -The increase in net cash provided by operating activities is primarily driven by an increase of $164.9 million of net income, net of $26.7 million of non-cash items, primarily due to a year over year increase in rental income and interest income, as discussed in our material changes analysis under Results of Operations above. The increase was partially offset by a $35.8 million change in the net movements of the operating assets and liabilities.
Investing Activities-The decrease in cash used in investing activities related primarily to (i) a $335.4 million decrease in loan placements, net of repayments as a result of fewer new loans advanced in 2025 compared to 2024 and paydowns on mortgage loans due from Ciena Healthcare Management, Inc. and on other loans during 2025, (ii) a $187.7 million increase in proceeds from the sales of real estate investments, (iii) an $11.9 million increase in distributions from unconsolidated entities in excess of earnings and (iv) a $3.8 million increase in receipts from insurance proceeds, partially offset by (i) a $274.4 million increase in real estate acquisitions primarily as a result of a 45-facility acquisition in the U.K. and Jersey in the second quarter of 2025, (ii) a $121.1 million increase in investments in unconsolidated entities, (iii) a $7.7 million increase in capital improvements to real estate investments and construction in progress and (iv) a $4.2 million decrease in proceeds from foreign currency forward contracts related to the termination of two foreign currency forward contracts during the first quarter of 2024.
Financing Activities-The change in cash (used in) provided by financing activities was primarily related to (i) a $628.9 million decrease in cash proceeds from the issuance of common stock as a result of decreased volume under our ATM Program and DRCSPP in 2025, (ii) a $97.6 million increase in repayments on other long-term borrowings, net of proceeds, primarily due to repayment of various debts during the fourth quarter of 2025, (iii) a $94.9 million increase in dividends paid primarily related to share issuances during 2024 and 2025, (iv) a $20.2 million increase in payment of financing related costs related to related to the 2025 Omega Credit Agreement entered into in September 2025, (v) a $14.6 million increase in distributions to Omega OP Unit holders and (vi) a $5.6 million increase in redemption of Omega OP Units.
Supplemental Guarantor Information
Parent has issued approximately $3.8 billion aggregate principal of senior notes outstanding at December 31, 2025 that were registered under the Securities Act of 1933, as amended. The senior notes are guaranteed by Omega OP.
The SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities, such as our senior notes. As a result of these amendments, registrants are permitted to provide certain alternative financial and non-financial disclosures, to the extent material, in lieu of separate financial statements for subsidiary issuers and guarantors of registered debt securities. Accordingly, separate consolidated financial statements of Omega OP have not been presented. Parent and Omega OP, on a combined basis, have no material assets, liabilities or operations other than financing activities (including borrowings under the outstanding senior notes, Revolving Credit Facility and 2028 Term Loan) and their investments in non-guarantor subsidiaries.
Omega OP is currently the sole guarantor of our senior notes. The guarantees by Omega OP of our senior notes are full and unconditional and joint and several with respect to the payment of the principal and premium and interest on our senior notes. The guarantees of Omega OP are senior unsecured obligations of Omega OP that rank equal with all existing and future senior debt of Omega OP and are senior to all subordinated debt. However, the guarantees are effectively subordinated to any secured debt of Omega OP. As of December 31, 2025, there were no significant restrictions on the ability of Omega OP to make distributions to Omega.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses. Our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to the Consolidated Financial Statements. These policies were followed in preparing the Consolidated Financial Statements for all periods presented. Actual results could differ from those estimates.
We have identified the following accounting policies that we believe are critical accounting policies. These critical accounting policies are those that have the most impact on the reporting of our financial condition and those requiring significant assumptions, judgments and estimates. With respect to these critical accounting policies, we believe the application of assumptions, judgments and estimates is consistently applied and produces financial information that fairly presents the results of operations for all periods presented. The following table presents information about our critical accounting policies, as well as the material assumptions used to develop each estimate:
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|
Nature of Critical Accounting Estimate |
Assumptions/Approach Used |
|
Revenue Recognition |
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|
Rental income from our operating leases is generally recognized on a straight-line basis over the lease term when we have determined that the collectibility of substantially all of the lease payments is probable. If we determine that it is not probable that substantially all of the lease payments will be collected, we account for the revenue under the lease on a cash basis. |
We assess the probability of collecting substantially all payments under our leases based on several factors, including, among other things, payment history of the lessee, the financial strength of the lessee and any guarantors, historical operations and operating trends, current and future economic conditions and expectations of performance (which includes known substantial doubt about an operator's ability to continue as a going concern). If our evaluation of these factors indicates it is not probable that we will be able to collect substantially all rents, we place that operator on a cash basis and limit our rental income to the lesser of lease income on a straight-line basis plus variable rents when they become accruable or cash collected. As a result of placing an operator on a cash basis, we may recognize a charge to rental income for any contractual rent receivable, straight-line rent receivable and lease inducements. |
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|
|
|
Nature of Critical Accounting Estimate |
Assumptions/Approach Used |
|
Real Estate Investment Impairment |
|
|
Assessing impairment of real property involves subjectivity in determining if indicators of impairment are present and in estimating the future undiscounted cash flows. The estimated future undiscounted cash flows are generally based on the related lease which relates to one or more properties and may include cash flows from the eventual disposition of the asset. In some instances, there may be various potential outcomes for a real estate investment and its potential future cash flows. In these instances, the undiscounted future cash flows used to assess the recoverability are probability-weighted based on management's best estimates as of the date of evaluation. These estimates can have a significant impact on the undiscounted cash flows. |
We evaluate our real estate investments for impairment indicators at each reporting period, including the evaluation of our assets' useful lives. The judgment regarding the existence of impairment indicators is based on factors such as, but not limited to, market conditions, operator performance including the current payment status of contractual obligations and expectations of the ability to meet future contractual obligations, legal structure, as well as our intent with respect to holding or disposing of the asset. If indicators of impairment are present, we evaluate the carrying value of the related real estate investments in relation to our estimate of future undiscounted cash flows of the underlying facilities to determine if an impairment charge is necessary. This analysis requires us to use judgment in determining whether indicators of impairment exist, probabilities of potential outcomes and to estimate the expected future undiscounted cash flows or estimated fair values of the facility which impact our assessment of impairment, if any. During 2025, we recorded impairments on real estate properties of approximately $22.6 million on eight facilities. During 2024, we recorded impairments on real estate properties of approximately $23.8 million on 14 facilities. |
|
Asset Acquisitions |
|
|
We believe that our real estate acquisitions are typically considered asset acquisitions. The assets acquired and liabilities assumed are recognized by allocating the cost of the acquisition, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis. Tangible assets consist primarily of land, building and site improvements and furniture and equipment. Identifiable intangible assets and liabilities primarily consist of the above or below market component of in-place leases. |
The allocation of the purchase price to the related real estate acquired (tangible assets and intangible assets and liabilities) involves subjectivity as such allocations are based on a relative fair value analysis. In determining the fair values that drive such analysis, we estimate the fair value of each component of the real estate acquired which generally includes land, buildings and site improvements, furniture and equipment, and the above or below market component of in-place leases. Significant assumptions used to determine such fair values include comparable land sales, capitalization rates, discount rates, market rental rates and property operating data, all of which can be impacted by expectations about future market or economic conditions. Our estimates of the values of these components affect the amount of depreciation and amortization we record over the estimated useful life of the property or the term of the lease. During 2025 and 2024, we acquired real estate assets of approximately $690.4 million and $740.5 million, respectively. These transactions were accounted for as asset acquisitions and the purchase price of each was allocated based on the relative fair values of the assets acquired and liabilities assumed. |
|
Allowance for Credit Losses on Real Estate Loans, Non-real Estate Loans and Direct Financing Leases |
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|
For purposes of determining our allowance for credit loss, we pool financial assets that have similar risk characteristics. We aggregate our financial assets by financial instrument type and by internal risk rating. Our internal ratings range between 1 and 7. An internal rating of 1 reflects the lowest likelihood of loss and a 7 reflects the highest likelihood of loss. We have a limited history of incurred losses and consequently have elected to employ external data to perform our expected credit loss calculation. We utilize a probability of default ("PD") and loss given default ("LGD") methodology. Periodically, the Company may identify an individual loan for impairment. When we identify a loan impairment, the loan is written down to the present value of the expected future cash flows. In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral. We may base our valuation on a loan's observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the sale of the collateral. |
We assess our internal credit ratings on a quarterly basis. Our internal credit ratings consider several factors including the collateral and/or security, the performance of borrowers underlying facilities, if applicable, available credit support (e.g., guarantees), borrowings with third parties, and other ancillary business ventures and real estate operations of the borrower. Our model's historic inputs consider PD and LGD data for residential care facilities published by the Federal Housing Administration ("FHA") along with Standards & Poor's one-year global corporate default rates. Our historical loss rates revert to historical averages after 36 periods. Our model's current conditions and supportable forecasts consider internal credit ratings, current and projected U.S. unemployment rates published by the U.S. Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis and the weighted average life to maturity of the underlying financial asset. During 2025 and 2024, we recorded a provision (recovery) for credit losses of approximately $2.3 million and ($15.5) million, respectively. As of December 31, 2025 and 2024, we had a total allowance for credit loss of $180.5 million and $198.6 million, respectively. A 10% increase or decrease in the FHA default rates as of December 31, 2025 would result in an additional provision or recovery for credit losses of $3.1 million. If the weighted average years to maturity on our portfolio increases or decreases by 10%, this will result in an additional provision or recovery for credit losses of $7.5 million. |
Omega Healthcare Investors Inc. published this content on February 09, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 09, 2026 at 15:59 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]