CVS Health, Omega Healthcare Investors and Welltower reported Wednesday on their first-quarter 2023 earnings.
CVS Health
CVS Health reported “strong first quarter results,” including closing the acquisitions of Signify Health and Oak Street Health, President and CEO Karen S. Lynch said.
“These additions are core to our strategy and will help unlock future growth as we push further into value-based care, which prioritizes keeping people healthy,” Lynch stated in a press release issued in conjunction with the earnings call.
The Woonsocket, RI-based company reported total revenue of $85.28 billion, an increase of 11% from the first quarter of 2022. Operating income decreased 2.8%, however, primarily due to a $349 million loss due to assets held for sale in CVS’ long-term care pharmacy business, Cincinnati-based Omnicare.
CVS Health adjusted its diluted earnings per share guidance range to $8.50 to $8.70 from $8.70 to $8.90. The company also confirmed its full-year 2023 cash flow from operations guidance range of $12.5 billion to $13.5 billion.
Read more coverage of the earnings call in McKnight’s Senior Living and McKnight’s Home Care.
Omega Healthcare Investors
Hunt Valley, MD-based Omega Healthcare Investors reported a net income for the first quarter of $37 million, or $0.15 per common share.
“Our first quarter financial performance was in line with expectations, as our earnings reflected the impact of the previously disclosed operator restructurings,” CEO Taylor Pickett stated in a press release issued in conjunction with the earnings call. “As we indicated last quarter, we expect our financial performance to improve in the coming quarters, as restructurings are concluded, restructured operators begin paying rent again and proceeds from asset sales are redeployed.”
The real estate investment trust continued with restructuring plans for LaVie Care Centers, Maplewood Senior Living, UK-based Healthcare Homes and Agemo, as well as transitions of two smaller operators. In the fourth quarter of 2022, the REIT’s funds available for distribution, or FAD, were $57.2 million; FAD related to these operators in the first quarter of 2023 was $35 million. That’s a $22.2 million decrease in FAD, or approximately $0.09 per share, with an increase in first quarter general and administrative expenses due to expense timing representing an additional $0.01 decrease in first quarter FAD.
“We anticipate our FAD related to the same pool of operators in Q2 2023 to be approximately $47 million with the full run rate of these operators in Q3 2023 at approximately $53 million,” Chief Financial Officer Bob Stephenson said.
Omega agreed to allow LaVie to defer up to $19.1 million (or 66% of contractual rent) from January through April. During the first quarter, LaVie paid $7.4 million in contractual rent.
Omega has completed $276 million in new investments year to date, which are expected to produce incremental FAD of approximately $2.8 million in the second quarter and $3.4 million of FAD in the third quarter.
“In short, although we are not yet providing full year guidance, we anticipate we will return to a FAD payout ratio under 100% in Q3 with a path to return to a normalized payout ratio in the high 80s to low 90s in 2024,” Stephenson said.
The board of directors on Tuesday declared a cash dividend of $0.61 per share for the quarter.
Read more coverage of the earnings call in McKnight’s Senior Living and McKnight’s Long-Term Care News.
Welltower
Toledo, OH-based Welltower’s first-quarter results exceeded expectations, according to CEO Shankh Mitra.
The real estate investment trust reported total portfolio year-over-year same store net operating income growth of 11%, driven by same-store net operating income growth in its seniors housing operating portfolio, or SHOP, of 23.4%.
SHOP year-over-year same store revenue increased 10% in the first quarter, driven by 240 basis points of year-over-year average occupancy growth and revenue per occupied room growth of 6.8%.
In the first quarter, Welltower completed $785 million of pro rata gross investments, including $529 million in acquisitions and loan funding and $257 million in development funding. The REIT opened four development projects for an aggregate pro rata investment amount of $57 million. Additionally during the quarter, Welltower completed pro rata property dispositions and loan payoffs of $92 million.
The REIT reported first-quarter net income attributable to common stockholders of $0.05 per diluted share and normalized funds from operations of $0.85 per diluted share, Chief Financial Officer Tim McHugh added. This represents a 4% year-over-year growth and 13% growth after adjusting for the year-over-year impact from a stronger dollar and higher base rates on floating rate debt, he said.
As part of the previously announced transition and sale of 147 skilled nursing facilities operated by ProMedica to Integra Healthcare Properties, in January Welltower sold to Integra a 15% interest in 31 skilled nursing assets for approximately $74 million. The transaction represents the second tranche in the formation of an 85/15 joint venture between Welltower and Integra, with the remaining tranches expected to close later in the year.
Read more coverage of the earnings call in McKnight’s Senior Living.
