The Ensign Group, Omega Healthcare Investors and The RMR Group held earnings calls on Friday.
Omega Healthcare Investors
Hunt Valley, MD-based Omega Healthcare Investors’ fourth quarter 2022 financials were in line with the third quarter as the company worked on restructuring plans for several operators.
The real estate investment trust said it completed $89 million in real estate acquisitions in the quarter. Also, it funded $15 million in capital renovation and construction-in-progress projects, sold 33 facilities for $321 million in cash proceeds and $105 million in seller financing, generating a $180 million gain. Additionally, Omega declared a $0.67 per share quarterly cash dividend on common stock to be paid in February.
“We have successfully concluded a number of operator restructurings, which have generally resulted in limited or no diminution in longer term funds available for distribution,” CEO Taylor Pickett said on Friday’s earnings call.
Although fourth-quarter financials were similar to the third quarter, the REIT said it expects a temporary dip in the first quarter of 2023 associated with the operator restructurings. But in a press release issued in conjunction with the earnings call, Pickett said that he expects things to level out as the year progresses.
“However, with both facility occupancy and profitability still meaningfully below pre-pandemic levels, the risk of further operator issues remains,” he said.
According to Chief Financial Officer Robert O. Stephenson, funds from operations in the fourth quarter represented a loss of $30 million ($0.13 per share) compared with $124 million ($0.50 per share) for the fourth quarter of 2021. Adjusted FFO was $177 million ($0.73 per share) for the quarter. Funds available for operation was $171 million, compared with FAD of $179 million for the same period in 2021.
“The year-over-year decrease is primarily the result of incremental write-offs of straight-line accounts receivable and lease inducements in 2022 of placing La Vie, Maplewood [Senior Living] and two others on a cash basis for revenue recognition,” Stephenson said.
Company executives also discussed the restructuring plans for LaVie Care Centers (formerly Consulate Health Care) and Maplewood, which it had detailed earlier in the month.
The Ensign Group
“We were pleased to announce another record quarter,” Ensign Group CEO Barry Port said in a press release issued in conjunction with Friday’s call.
The company announced record operating results for the fourth quarter and 2022, reporting diluted earnings per share of $1.06 and $3.95 for the quarter and year, respectively. Ensign also reported adjusted earnings per share of $1.10 for the quarter and $4.14 for the year.
“Remarkably, we saw continued improvement in occupancies, skilled revenue and managed care revenues,” Port said. “We were particularly pleased that we achieved sequential growth in overall occupancy for the eighth consecutive quarter, with same store and transitioning operations increasing by 2.9% and 4.3%, respectively, over the prior year quarter.”
As of the end of the quarter, he said, same store occupancy reached 77.8% as the organization moves closer to pre-COVID occupancy levels — occupancy was 80.1% in March 2020.
According to Suzanne Snapper, Ensign’s executive vice president and chief financial officer, the company’s liquidity remains strong, with approximately $316.3 million of cash on hand and $593.3 million of available capacity under its line-of-credit.
Diluted earnings per share for the year were $3.95, and adjusted diluted earnings per share for the year were $4.14, representing an increase of 13.7% over 2022. Diluted earnings per share for the quarter were $1.06, an increase of 23.3%, and adjusted diluted earnings per share were $1.10, representing an increase of 13.4%, both over the same quarter in 2021.
Read more coverage of this earnings call in McKnight’s Long-Term Care News.
The RMR Group
The RMR Group of Newton, MA, reported net income of $6.3 million for its first quarter of fiscal 2023 (September through December 2022).
The alternative asset management company provides management services to AlerisLife and the real estate investment trust Diversified Healthcare Trust (stock symbol DHC), among other entities.
“At DHC, we are working with its senior living operators to improve DHC’s operating performance,” RMR President and CEO Adam Portnoy said, noting that for the third quarter of calendar year of 2022, DHC reported its sixth consecutive quarter of occupancy growth in its senior living communities.
Among the operators of communities in the DHC portfolio are AlerisLife (Five Star Senior Living), Oaks-Caravita Senior Care, Phoenix Senior Living, Charter Senior Living, Cedarhurst Senior Living, Stellar Senior Living, Northstar Senior Living, Navion Senior Solutions, IntegraCare Senior Living and Omega Senior Living, according to a November investor presentation posted on DHC’s website.
The trend toward occupancy growth in DHC’s portfolio, Portnoy said, “is consistent with the broader industry, though inflationary pressures and labor supply challenges remain a headwind to margin and profitability for the entire industry.
“These efforts are critical to DHC’s long-term success and its ability to refinance upcoming debt maturities in 2024,” he continued. “With over $800 million in cash as of Sept. 30, we are confident DHC can both weather these near-term challenges and continue strategically investing in its assets.”
Regarding acquisitions, Portnoy said that they will be “limited” among the REITs to which RMR provides management services. In addition to senior living, those REITs are active in real estate in the the hotel, retail, medical office building, office, and industrial and logistics industries.
“If there are some acquisitions, they could be smaller acquisitions and/or related to properties in and around existing properties — let’s say an add-on from an adjacent property that adds the value to an existing property or something like that,” he said.
RMR, Portnoy said, is “looking at to deploy capital this year across the REITs, especially in our senior living portfolio and our hotel portfolio — well into the hundreds of millions of dollars that we plan to be putting to work.” The activity, he added, “does create fees for RMR itself, because we’re working on the construction management side of that.”
More acquisition activity could come in the second half of the year, Portnoy said, depending on the timing of debt repayments involving some of the REITs.
Lois Bowers reported on The RMR Group earnings call for this article.
Read more coverage of The RMR Group earnings call, especially pertaining to Portnoy’s planned acquisition of AlerisLife, in McKnight’s Senior Living.
