Yahoo Finance Omega Healthcare (OHI) to Post Q4 Earnings: What's in Store?
Omega Healthcare Investors, Inc. OHI is slated to report fourth-quarter and full-year 2022 results on Feb 2 after the closing bell. The company’s quarterly results are likely to display a year-over-year fall in revenues and funds from operations (FFO) per share.
In the last reported quarter, this healthcare real estate investment trust reported adjusted FFO per share of 76 cents, in line with the Zacks Consensus Estimate. OHI’s top line declined 14.9% year over year on asset sales and operator restructurings. However, lower expenses in the quarter were a tailwind.
The company’s FFO per share surpassed the consensus mark in one of the trailing four quarters, met the same in one and missed it in the other two, with the average beat being 0.36%. This is depicted in the graph below.
Omega Healthcare Investors, Inc. Price and EPS Surprise
Omega Healthcare Investors, Inc. price-eps-surprise | Omega Healthcare Investors, Inc. Quote
Factors at Play
Omega Healthcare invests in the long-term healthcare industry with a particular focus on skilled nursing facilities (SNFs) and assisted living facilities (ALFs). Its properties are located in the United States and the United Kingdom and are operated by a diverse group of healthcare companies, primarily in a triple-net lease structure.
In recent quarters, the aftermath of COVID-19 has been adversely impacting both occupancy and staffing for several of the company’s operators. Per the November Investor Presentation, the company noted that expenses per patient day, although having eased out, remain elevated compared with January 2020, mainly due to higher staffing-related costs. This has led some operators to default on rent payments, and OHI’s exposure to troubled operators turned out to be a pressing concern.
In October 2022, Omega collected rent from operators representing around 91% of its third-quarter 2022 annualized contractual rent and mortgage obligations. Hence, the nonpayment of the rent by some operators is likely to have affected the company’s performance in the fourth quarter.
Moreover, with regards to the ongoing restructurings concerning Maplewood and LaVie, they were placed on a cash basis for revenue recognition during the quarter under preview. Consequently, OHI anticipates incurring a non-cash write-off of straight-line accounts receivable and lease inducements totaling $29.3 million and $58 million, respectively, which is likely to have resulted in lower rental income in fourth-quarter 2022.
The Zacks Consensus Estimate for fourth-quarter rental income is pegged at $166.6 million, down from $203.2 million in the prior quarter and $214.3 million in the year-ago period. The consensus mark for fourth-quarter revenues of $146.1 million indicates a 41.6% decline year over year.
Also, the company’s restructurings are expected to have led to a fall in EBITDA and funds available for distribution during the quarter. The near-term leverage, too, is likely to have been higher than the historical range.
Omega Healthcare’s activities during the December-quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1.4% downward to 73 cents over the past month. The figure also implies a fall of 5.2% year over year.
For the full year, the Zacks Consensus Estimate for FFO per share has been revised marginally downward to $3.00 over the past month. Moreover, the figure indicates a 9.4% decrease year over year on revenues of $850.8 million.
Earnings Whispers
Our proven model does not conclusively predict an FFO beat for Omega Healthcare this time. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.
Earnings ESP: OHI has an Earnings ESP of -0.46%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: OHI currently carries a Zacks Rank of 5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Warrant a Look
Here are some stocks that are worth considering from the REIT sector, as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:
Highwoods Properties HIW is slated to release fourth-quarter earnings on Feb 7. HIW has an Earnings ESP of +0.10% and a Zacks Rank #3 (Hold) at present.
Ventas VTR is scheduled to report quarterly figures on Feb 9. VTR has an Earnings ESP of +0.15% and a Zacks Rank #3 currently.
Stag Industrial STAG is slated to report quarterly numbers on Feb 15. STAG has an Earnings ESP of +2.89% and carries a Zacks Rank #2 (Buy) presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represent FFO — a widely used metric to gauge the performance of REITs.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ventas, Inc. (VTR) : Free Stock Analysis Report
Highwoods Properties, Inc. (HIW) : Free Stock Analysis Report
Omega Healthcare Investors, Inc. (OHI) : Free Stock Analysis Report
Stag Industrial, Inc. (STAG) : Free Stock Analysis Report
