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Omega Healthcare Investors (OHI) Reports OK Q4 With Upbeat Guidance

|Includes: Omega Healthcare Investors, Inc (OHI)

For blog posted data on Health Care REITs, I will be posting data (as it comes in) without much context. This would logical result in a less enlightening reading experience compared to post in other sectors. Remember that I am not compensated for blog posts. Fill the comment section up with requests for context and meaning and you will discourage the posting of future data in this sector. I expect this condition will change over time.

With the above being said, I believe some things stand out in the OHI presentation of numbers. FAD/share is growing at a superior rate - and FAD is more important than FFO when it comes to projecting dividend growth.

The earnings projections from Nasdaq:

Fiscal
Year End
Consensus
FFO* Forecast
High FFO*
Forecast
Low FFO*
Forecast
Number of
Estimates
Over the Last 4 Weeks
Number of Revisions
Up Down
Dec 2016 3.31 3.32 3.3 4 0 0
Dec 2017 3.37 3.43 3.3 4 0 0
Dec 2018 3.54 3.54 3.54 1 0 0

The bad news - "For the twelve-month period ended December 31, 2016, FFO was $660.1 million, or $3.27 per common share on 202 million weighted-average common shares outstanding, compared to $455.3 million, or $2.52 per common share on 181 million weighted-average common shares outstanding, for the same period in 2015."

The amended bad news - the consensus analyst projection was out of touch with company guidance - and that explains the miss.

The good news - 2017 guidance is $3.38 - $3.42 per share.

The revenue projections from Yahoo Finance:

  Current Qtr. Next Qtr. Current Year Next Year
No. of Analysts 3 3 4 4
Avg. Estimate 195.14M 200.65M 747.9M 840.8M
Low Estimate 192.79M 193.79M 741.79M 798.44M
High Estimate 197.05M 204.23M 759.2M 874.4M
Year Ago Sales 175.29M 176.7M 605.99M 747.9M
Sales Growth (year/est) 11.30% 13.60% 23.40% 12.40%

The above projections all look like brain farts. Revenue was $234.486 million.

My spreadsheets:

OHI

  Omega Healthcare Investors Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 Q2-14 Q1-14
  FFO 171.521 162.586 172.331 153.616 127.435 147.531 100.736 79.644 87.391 93.946 79.676 79.664
  FFO/share 0.84 0.80 0.87 0.77 0.65 0.76 0.52 0.59 0.68 0.73 0.63 0.68
  Adjusted FFO 180.421 169.932 172.956 165.352 159.362 154.449 149.670 95.497 92.928 94.010 79.676 79.664
  FAD 163.238 152.596 153.964 148.523 142.970 139.899 136.134 87.510 85.076 85.923 79.743 81.206
  FAD/share 0.7964 0.7477 0.7731 0.7488 0.7236 0.7168 0.7000 0.6491 0.6621 0.6690 0.6257 0.6506
  Current year FFO Guide * 3.40 3.26 3.28 3.16 * 3.19 2.51 2.49 2.44   2.73 2.72  
  Current year AFFO Guide * 3.42 3.38 3.38 3.27 * 3.27 3.06 3.02 3.01   2.83 2.83  
  Current year FAD Guide     3.04 2.97 * 2.97 2.78 2.79 2.78   2.59 2.59  
  Fixed Charge Coverage 4.7x 4.6x 5.1x 5.0x 4.8x 4.7x 4.7x 3.8x 3.8x 3.9x 3.9x 4.2x
  Net Debt/Adjust EBITDA 4.7x 4.9x 4.7x 4.9x 4.4x 4.7x 4.5x 3.7x 4.7x 4.5x 4.9x 4.4x
  Total Debt 4.366 4.433 4.176 4.115 3.569 4.245 3.448 2.627 2.378 2.301 2.343  
  Total Debt / Book 51.2% 51.5% 50.3% 51.0% 46.5% 51.1% 45.8% 59.7% 62.9% 62.1% 63.0%  
  Diluted share count 204.955 204.078 199.157 198.350 197.560 195.183 194.482 134.806 128.492 128.428 127.436  
  Debt/Share 21.30 21.72 20.97 20.75 18.06 21.75 17.73 19.49 18.51 17.92 18.39  
  Total investments 7.567 7.998 7.628 7.551 7.008 7.118 6.967 3.638 3.651 3.592 3.600  
  Debt / investments 57.7% 55.4% 54.7% 54.5% 50.9% 59.6% 49.5% 72.2% 65.1% 64.1% 65.1%  
  Adjusted FFO/investments 9.54% 8.50% 9.10% 8.76% 9.10% 8.68% 8.59% 10.50% 9.57% 10.46% 8.85%  
  Revenues 234.486 224.638 228.824 212.879 210.512 201.974 197.711 133.420 131.321 130.665
  Revenue/Investments 12.39% 11.23% 12.00% 11.28% 12.02% 11.35% 11.35% 14.67% 14.39% 14.55%
  Adjusted Income 79.774 78.956 37.466 24.414 31.321 20.523 15.103 19.669 22.836 17.714
  Adj Inc/Investments 4.22% 3.95% 1.96% 1.29% 1.79% 1.15%        

The asterisk is before the Q4 projection number as a reminder that the Q4 projection is for next year's FFO.

Once again, FAD growth is great.

Another bit of good news - 100% of the Q4 'impairments' number was from provision - not actual losses. And the number is down.

OHI

  Omega Health Care Investors Q4-16 Q3-16 Q2-16 Q1-16 Q4-15 Q3-15 Q2-15 Q1-15 Q4-14 Q3-14 2Yr Average
  Revenues 234.486 224.638 228.824 212.879 210.512 201.974 197.711 133.420 131.321 130.665 per quarter
  Impairments 5.878 17.275 45.421 39.682 10.619 1.743 12.889 5.980 0 2.102
  Impair/Revenue Ratio 2.51% 7.69% 19.85% 18.64% 5.04% 0.86% 6.52% 4.48% 0 1.61% 7.19%

Disclosure: I am/we are long OHI.