Omega Healthcare Investors, Inc. (OHI) Earnings

Management highlights

### Leadership Transition and Strategic Retrospective - CEO Taylor Pickett and CFO Bob Stephenton noted this is their 100th and final earnings call ahead of retirement, and expressed confidence in incoming leadership led by President Matthew Gourmand. - Management reflected on 25 years of industry evolution: the skilled nursing (SNF) sector underwent major reimbursement reform in the 1990s that caused widespread bankruptcies, while senior housing saw falling cap rates driven by flexible pricing and extended resident stays. Growing baby boomer aging demand is now lowering SNF cap rates, narrowing the historical spread with senior housing. - Omega has shifted its portfolio from nearly 100% SNF exposure in 2001 to a diversified mix including significant senior housing and UK care home exposure, while growing its core SNF portfolio. Top 10 operators now include new entrants Pax and the GoldCare UK portfolio, with Sabre now ranked as the number one operator. ### Portfolio Management and Transaction Activity - Completed $480 million strategic sale of 18 Communicare assets in Maryland and West Virginia, improving credit with Communicare and generating proceeds for higher-accretion redeployment. All asset sales this quarter were completed at an effective 6.7% cap rate on cash flow. - Proactively transitioned 20 underperforming facilities from Sienna to strong credit operators Sabre and HHC, with no negative FAD impact. The transaction strengthened Sienna's overall credit profile, and Omega will benefit from future performance improvements via its 9.9% ownership in Sabre Operating Company. - Closed $470 million in new investments year-to-date, with $126 million in new investments (excluding $18 million in CapEx) in Q2 2026, and an additional $93 million closed post-quarter-end. Investments span U.S. SNF, U.S. senior housing, and UK care homes, including Omega's first RIDEA structure investment in the UK. - Expected stabilized unlevered returns are low double digits for triple net deals, and low to mid-teens for RIDEA deals. The Sabre PropCo JV (49% Omega equity interest) acquired 9 Laurels portfolio facilities for $160 million with no additional equity required from partners. ### Balance Sheet Strength - Proceeds from asset sales and loan repayments paid down the $2 billion revolver to only $6 million in borrowings as of quarter-end. Leverage decreased to 3.3x (historically low levels), fixed charge coverage ratio is 6.5x, and the next scheduled debt maturity is not until April 2027. - Total liquidity includes $39 million in available cash, $145 million in restricted cash (with $118 million in 1031 exchange proceeds held for future investments), and ongoing access to equity markets via DRIP and ATM programs. ### Industry and Regulatory Updates - The U.S. nursing home industry has fully recovered pre-pandemic workforce levels as of June 2026, though more progress is needed to meet growing demographic-driven demand. Management supports anti-fraud healthcare reform but hopes upstanding providers are not inadvertently impacted by new regulations.

Guidance

- Management increased and tightened full-year 2026 adjusted FFO guidance to a range of $3.22 to $3.26 per share, from the prior range of $3.19 to $3.25 per share. The midpoint of the new guidance is $3.24 per share, a 2-cent increase from the prior midpoint. - Guidance includes the impact of all new investments completed as of July 29, 2026, scheduled loan repayments, the 1-cent common dividend increase announced in the prior week, and ongoing quarterly portfolio pruning of $15 to $25 million in asset sales per quarter. It does not include potential additional unannounced investments, asset sales, or capital market transactions. - The asset sale headwind from Q2 2026 is expected to also impact Q3 2026 earnings, but redeployment of sale proceeds is expected to drive stronger growth in Q4 2026 and into 2027.

Segment performance

The transcript does not provide a formal breakdown of financial performance and revenue contribution percentages by individual product segment. Aggregate company-level results for Q2 2026 are: total revenue of $328 million (up from $283 million year-over-year Q2 2025); net income available to common shareholders of $363 million ($1.19 per share), up from $137 million ($0.46 per share) YoY; adjusted Funds From Operations (AFFO) of $261 million ($0.83 per share); and Funds Available for Distribution (FAD) of $248 million ($0.78 per share). The core triple net and mortgage loan portfolio reported trailing 12-month operator EBITDA coverage of 1.65x as of March 31, 2026, up from 1.58x at the end of Q4 2025. The early-stage Senior Housing Operating Portfolio (SHOP) is performing in line with underwritten expectations.

Risks & headwinds

- Management noted that indirect negative impacts to the SNF sector from state budget constraints following new regulatory reforms focused on other healthcare segments are a potential risk, though no such impacts have been observed to date. - Proposed UK adult social care system reform could create reimbursement uncertainty, though management believes well-positioned high-quality care homes with aligned pricing will benefit from cost-focused reform rather than face headwinds. - Proactive portfolio management is already addressed most near-term operator credit risks; management reports no major operator concerns on its watch list as of Q2 2026, and continues to pursue opportunistic portfolio transitions to further strengthen credit quality.

Analyst Q&A

• Q: Why did the UK operator agree to convert four existing Omega-owned care homes from triple net to a RIDEA structure, and what is the alignment strategy for RIDEA management fees?

  A: The transaction allowed the operator to take some risk off the table by selling the operating business at an attractive price, while Omega can earn meaningfully higher returns than a traditional triple net structure over time. Management prioritizes economic alignment of interests over adhering to industry standard fee structures, noting that value creation from buying high-quality assets at attractive prices means there is enough upside for all parties to succeed.

• Q: Can Omega share a target size for the SHOP operating portfolio, and what operational changes have been made to support growth of this segment?

  A: Omega does not publish an explicit target for SHOP size, but management expects to grow SHOP consistently as attractive opportunities that meet investment criteria become available. To support growth, the company has hired new talent with deep capital allocation backgrounds, added operational and relationship management experienced industry staff, expanded data analysis and AI capabilities, and strengthened back-office and accounting functions to manage the more operationally intensive RIDEA model.

• Q: What is the path to growth via active portfolio transitions like the Communicare and Ciena deals, and are there more large transitions coming?

  A: Both the Communicare and Ciena transactions were proactive, Omega-led initiatives: Omega identified underperforming assets and approached operators to structure mutually beneficial transitions that improved overall portfolio credit quality. Management noted that most defensive portfolio adjustments are complete, and the team is now focused on opportunistic offensive transactions to boost accretion, with no large transitions currently ready to announce.

• Q: Is the deepening relationship with Sabre replicable for other operators, and will Sabre exposure become too concentrated?

  A: The Sabre relationship is built on a decade of experience working with the team, whose clinical quality, operational philosophy, and capital allocation approach are closely aligned with Omega's. While exceptional operators like Sabre are rare, management is open to similar aligned partnerships with other high-quality operators. Omega maintains overall portfolio diversification, but will prioritize growing with proven strong operators over diversification for diversification's sake, and does not have a hard cap on Sabre exposure.