Omega Healthcare sees EBITDA declining in Q1 vs. Q4

In an investor presentation, the company states: "At the end of 3Q22, Healthcare Homes operated 42 Omega-owned care homes in the UK. Operating performance held up quite well during the pandemic, as occupancy declines were more modest than in the US. In addition, the UK government provided financial support to the industry. However, in late 2022, due to the timing of the expiration of their prior utility contracts, energy costs increased in excess of 300%, based on October 2022 financials, which, along with continuing provisions for agency costs, impinged the operator’s near-term liquidity. 1) We have agreed to allow a deferral up to 4 months of rent for Healthcare Homes -January through April 2023. In 4Q22 and FY22, Omega received cash rents from Healthcare Homes of GBP 5.0M and GBP 19.8M, respectively. 2) Healthcare Homes may choose not to defer any or all of this rent. 3) We are also providing nominal short-term financing to Healthcare Homes. This restructuring is still ongoing and therefore may be subject to change. As a result of these restructurings, we expect both EBITDA and FAD to decline from 4Q22 to 1Q23. While Agemo is scheduled to resume paying rent in 2Q23, as we continue to work through the restructuring of the operators noted above, EBITDA and FAD will continue to be negatively impacted. This will result in both our dividend payout ratio and our near-term leverage being higher than our historical range during this period of time. However, based on the expected outcomes of these restructurings, we continue to believe that both our dividend payout ratio and our leverage will return to our historical range upon resolution of these operator issues." Reference Link