Item 7.01 Regulation FD Disclosure.
On September 24, 2020, Omega Healthcare Investors, Inc. ("Omega" or the
"Company") issued a press release regarding its accounting treatment for
operators with going concern disclosures. Omega's press release is attached as
Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference
The information in this Item 7.01 of this Current Report on Form 8-K and the
Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such filing.
Item 8.01 Other Events.
On September 24, 2020, the Company announced that it is revising its method of
accounting for lease-related revenues of operators that have informed the
Company of doubt regarding their ability to continue as a going concern.
Beginning in the quarter ending September 30, 2020, the Company will record
revenue for such operators on a cash-basis accounting method rather than a
straight-line accounting method. As a result, based on information we received
in August and September of 2020, Omega will be accounting for the revenues of
two of our operators, Genesis Healthcare, Inc. ("Genesis") and Agemo Holdings,
LLC (f/k/a Signature Healthcare) ("Agemo"), on a cash basis for the quarter
ending September 30, 2020.
Omega expects the impact of this change will be a write-down of straight-line
receivables and lease inducements of approximately $140 million in the quarterly
period ending September 30, 2020, representing $65 and $75 million for Genesis
and Agemo, respectively. In addition, the Company will be recording an
impairment estimated at $28 million, related to the uncollateralized portion of
a loan to Agemo. Omega does not currently expect to record a reserve with
respect to its other investments outstanding in these operators, which are
expected to be approximately $81 million and $29 million as of September 30,
2020 for Genesis and Agemo, respectively, in view of the collateral and other
credit support available to Omega in connection with these obligations. In 2020,
throughout the COVID-19 pandemic, Omega has collected all contractual rents due
from Genesis and Agemo.
Information and conditions may change with respect to these operators, or
additional actions may be taken with regard to other operators in the Omega
portfolio, based on Omega's quarterly review of its portfolio in connection with
filing of its quarterly report for the quarter ending September 30, 2020.
Further information on Omega's policies and considerations when accounting for
rental income and impaired loans can be found in Omega's quarterly report on
Form 10-Q for the period ended June 30, 2020, filed on August 7, 2020, and
Omega's annual report on Form 10-K for the year ended December 31, 2019, filed
on February 28, 2020.
This document includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements regarding Omega's or its
tenants', operators', borrowers' or managers' expected future financial
condition, results of operations, cash flows, funds from operations, operating
metrics, expected write-offs, operator performance after the pandemic,
competitive positions, acquisitions, expected lease income, plans and objectives
of management for future operations and statements that include words such as
"anticipate," "if," "believe," "plan," "estimate," "expect," "intend," "may,"
"could," "should," "will" and other similar expressions are forward-looking
statements. These forward-looking statements are inherently uncertain, and
actual results may differ from Omega's expectations.
Omega's 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 Omega's properties, including those relating to reimbursement by
third-party payors, regulatory matters and occupancy levels; (ii) the impact of
2019 novel coronavirus ("COVID-19") on our business and the business of our
operators, including without limitation, the extent and duration of the COVID-19
pandemic, increased costs experienced by operators of skilled nursing facilities
("SNFs) and assisted living facilities ("ALFs") in connection therewith, and the
extent to which continued government support may be available to operators to
offset such costs and the conditions related thereto; (ii) the ability of our
operators to comply with the terms and conditions pursuant to which government
support may be available; (iii) the impact of events or circumstances that we
become aware of in the future on the expectations set forth herein regarding
financial measures as of and for the period ending September 30, 2020; (iv) the
ability of any of Omega's operators in bankruptcy to reject unexpired lease
obligations, modify the terms of Omega's mortgages and impede the ability of
Omega to collect unpaid rent or interest during the pendency of a bankruptcy
proceeding and retain security deposits for the debtor's obligations, and other
costs and uncertainties associated with operator bankruptcies; (v) the
availability and cost of capital to us; (vi) competition in the financing of
healthcare facilities; (vii) competition in the long-term healthcare industry
and shifts in the perception of various types of long-term care facilities,
including SNFs and ALFs; (viii) additional regulatory and other changes in the
healthcare sector; (ix) changes in the financial position of our operators; (x)
the effect of economic and market conditions generally, and particularly in the
healthcare industry; (xi) changes in interest rates; (xiii) changes in tax laws
and regulations affecting real estate investment trusts ("REITs"); (xiii) the
potential impact of changes in the SNF and ALF market or local real estate
conditions on the Company's ability to dispose of assets held for sale for the
anticipated proceeds or on a timely basis, or to redeploy the proceeds therefrom
on favorable terms; (iv) Omega's ability to maintain its status as a REIT; (xv)
the effect of other factors affecting our business or the businesses of our
operators that are beyond our or their control, including natural disasters,
other health crises or pandemics and governmental action, particularly in the
healthcare industry; (xvi) the ability of our operators to successfully perform
following the COVID-19 pandemic; and (xvii) other factors identified in Omega's
filings with the SEC. Statements regarding future events and developments and
Omega's future performance, as well as management's expectations, beliefs,
plans, estimates or projections relating to the future, are forward looking
We caution you that the foregoing list of important factors may not contain all
the material factors that are important to you. Accordingly, readers should not
place undue reliance on those statements. All forward-looking statements are
based upon information available to us on the date of this document. We
undertake no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or otherwise, except as
otherwise required by law.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description of Exhibit
99.1 Press release issued by the Company dated September 24, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
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