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Omega Announces Third Quarter 2011 Financial Results; Adjusted FFO Of $0.48 Per Share For The Third Quarter

The Company’s Adjusted FFO guidance is based on a number of assumptions, which are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. Without limiting the generality of the foregoing, the completion of acquisitions, divestitures, capital and financing transactions, and variations in restricted stock amortization expense may cause actual results to vary materially from our current expectations. There can be no assurance that the Company will achieve its projected results.

CONFERENCE CALL

The Company will be conducting a conference call on Tuesday, November 1, 2011, at 10 a.m. Eastern to review the Company’s 2011 third quarter results and current developments. Analysts and investors interested in participating are invited to call (877) 317-6789 from within the United States or (412) 317-6789 from outside the United States and ask the operator to be connected to the “Omega Healthcare Third Quarter 2011 Earnings Call.”

To listen to the conference call via webcast, log on to www.omegahealthcare.com and click the “earnings call” icon on the Company’s home page. Webcast replays of the call will be available on the Company’s website for two weeks following the call.

The Company is a real estate investment trust investing in and providing financing to the long-term care industry. At September 30, 2011, the Company owned or held mortgages on 399 skilled nursing facilities, assisted living facilities and other specialty hospitals with approximately 46,246 licensed beds (44,485 available beds) located in 35 states and operated by 49 third-party healthcare operating companies. In addition, the Company has two facilities currently held for sale.

This announcement includes forward-looking statements, including without limitation the information under the heading “2011 Adjusted FFO Guidance.” 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 the Company’s properties, including those relating to reimbursement by third-party payors, regulatory matters and occupancy levels; (ii) regulatory and other changes in the healthcare sector; (iii) changes in the financial position of the Company’s operators; (iv) the ability of any of the Company’s operators in bankruptcy to reject unexpired lease obligations, modify the terms of the Company’s mortgages and impede the ability of the Company to collect unpaid rent or interest during the pendency of a bankruptcy proceeding and retain security deposits for the debtor's obligations; (v) the availability and cost of capital; (vi) changes in the Company’s credit ratings and the ratings of its debt securities; (vii) competition in the financing of healthcare facilities; (viii) the Company’s ability to maintain its status as a real estate investment trust; (ix) the Company’s ability to manage, re-lease or sell any owned and operated facilities; (x) the Company’s ability to sell closed or foreclosed assets on a timely basis and on terms that allow the Company to realize the carrying value of these assets; (xi) the effect of economic and market conditions generally, and particularly in the healthcare industry; and (xii) other factors identified in the Company’s filings with the Securities and Exchange Commission. Statements regarding future events and developments and the Company’s future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements. The Company undertakes no obligation to update any forward-looking statements contained in this announcement.

OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
   
September 30, December 31,
2011   2010
(Unaudited)
ASSETS
Real estate properties
Land and buildings $ 2,341,012 $ 2,366,856
Less accumulated depreciation   (445,272 )   (380,995 )
Real estate properties – net 1,895,740 1,985,861
Mortgage notes receivable – net   119,076     108,557  
2,014,816 2,094,418
Other investments – net   30,394     28,735  
2,045,210 2,123,153
Assets held for sale – net   811     670  
Total investments 2,046,021 2,123,823
 
Cash and cash equivalents 10,730 6,921
Restricted cash 19,835 22,399
Accounts receivable – net 96,615 92,819
Other assets 58,189 57,172
Operating assets for owned and operated properties   275     873  
Total assets $ 2,231,665   $ 2,304,007  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Revolving line of credit $ 45,000 $
Secured borrowings 198,526 201,296
Unsecured borrowings – net 975,384 975,669
Accrued expenses and other liabilities 114,438 121,859
Operating liabilities for owned and operated properties   472     1,117  
Total liabilities   1,333,820     1,299,941  
 
Stockholders’ equity:

Preferred stock issued and outstanding – 4,340 shares Series D with an aggregate liquidation preference of $108,488 as of December 31, 2010

 

 

108,488

Common stock $.10 par value authorized – 200,000 shares issued and outstanding – 103,346 shares as of September 30, 2011 and 99,233 as of December 31, 2010

 

10,335

 

9,923

Common stock – additional paid-in-capital 1,468,598 1,376,131
Cumulative net earnings 614,137 580,824
Cumulative dividends paid   (1,195,225 )   (1,071,300 )
Total stockholders’ equity   897,845     1,004,066  
Total liabilities and stockholders’ equity $ 2,231,665   $ 2,304,007  
 
OMEGA HEALTHCARE INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands, except per share amounts)
   
Three Months Ended Nine Months Ended
September 30, September 30,
2011   2010   2011   2010
Revenue    
Rental income $ 68,622 $ 66,299 $ 203,446 $ 165,028
Mortgage interest income 3,617 2,576 10,548 7,709
Other investment income – net 383 746 1,641 3,282
Miscellaneous 196 103 265 3,852
Nursing home revenues of owned and operated assets   -     -     -     7,336  
Total operating revenues 72,818 69,724 215,900 187,207
 
Expenses
Depreciation and amortization 24,871 27,742 74,848 58,880
General and administrative 2,873 3,926 10,031 10,002
Stock-based compensation expense 1,520 450 4,518 1,756
Acquisition costs - 78 45 1,490
Impairment on real estate properties - - 24,971 155
Provisions for uncollectible mortgages, notes and accounts receivable - - 4,139 -
Nursing home expenses of owned and operated assets   148     480     603     7,849  
Total operating expenses 29,412 32,676 119,155 80,132
 
Income before other income and expense 43,406 37,048 96,745 107,075
Other income (expense):
Interest income 12 11 35 88
Interest expense (20,101 ) (19,070 ) (60,173 ) (47,350 )
Interest – amortization of deferred financing costs (629 ) (978 ) (2,026 ) (2,881 )
Interest –refinancing costs   (3,055 )   -     (3,071 )   (3,461 )
Total other expense (23,773 ) (20,037 ) (65,235 ) (53,604 )
 
Income before gain (loss) on assets sold 19,633 17,011 31,510 53,471
Gain (loss) on assets sold - net   1,803     (4 )   1,803     (4 )
Net income 21,436 17,007 33,313 53,467
Preferred stock dividends - (2,271 ) (1,691 ) (6,814 )
Preferred stock redemption   -     -     (3,456 )   -  
Net income available to common stockholders $ 21,436   $ 14,736   $ 28,166   $ 46,653  
 
Income per common share available to common stockholders:
Basic:
Net income $ 0.21   $ 0.15   $ 0.28   $ 0.50  
Diluted:
Net income $ 0.21   $ 0.15   $ 0.28   $ 0.50  
 
Dividends declared and paid per common share $ 0.40   $ 0.36   $ 1.15   $ 1.00  
 
Weighted-average shares outstanding, basic   103,180     95,698     101,722     92,523  
Weighted-average shares outstanding, diluted   103,231     95,987     101,772     92,700  
 
Components of other comprehensive income:
Net income $ 21,436   $ 17,007   $ 33,313   $ 53,467  
Total comprehensive income $ 21,436   $ 17,007   $ 33,313   $ 53,467  
 
OMEGA HEALTHCARE INVESTORS, INC.
FUNDS FROM OPERATIONS
Unaudited
(in thousands, except per share amounts)
   
Three Months Ended Nine Months Ended
September 30, September 30,
2011   2010   2011   2010
   
Net income available to common stockholders $ 21,436 $ 14,736 $ 28,166 $ 46,653
(Deduct gain)/add back loss from real estate dispositions   (1,803 )   4   (1,803 )   4  
Sub – total 19,633 14,740 26,363 46,657
Elimination of non-cash items included in net income:
Depreciation and amortization   24,871     27,742   74,848     58,880  
Funds from operations available to common stockholders $ 44,504   $ 42,482 $ 101,211   $ 105,537  
 
Weighted-average common shares outstanding, basic 103,180 95,698 101,722 92,523
Restricted stock PRUs 38 281 38 168
Assumed exercise of stock options 3
Deferred stock   13     8   12     6  
Weighted-average common shares outstanding, diluted   103,231     95,987   101,772     92,700  
 
Funds from operations per share available to common stockholders $ 0.43   $ 0.44 $ 0.99   $ 1.14  
 
Adjusted funds from operations:
Funds from operations available to common stockholders $ 44,504 $ 42,482 $ 101,211 $ 105,537
Deduct litigation settlements (1,111 )
Deduct gain from sale of securities (789 )
Deduct nursing home revenues (7,336 )
Add back non-cash preferred stock redemption charges 3,456
Add back non-cash provision for impairments on real estate properties 24,971 155
Add back non-cash provision for uncollectible accounts receivable 4,139
Add back nursing home expenses 148 480 603 7,849
Add back interest refinancing expense 3,055 3,071 3,461
Add back acquisition costs 78 45 1,490
Add back non-cash stock-based compensation expense   1,520     450   4,518     1,756  
Adjusted funds from operations available to common stockholders $ 49,227   $ 43,490 $ 142,014   $ 111,012  
 

This press release includes Funds From Operations, or FFO, which is a non-GAAP financial measure. For purposes of the Securities and Exchange Commission’s Regulation G, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable financial measure calculated and presented in accordance with GAAP in the statement of operations, balance sheet or statement of cash flows (or equivalent statements) of the company, or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable financial measure so calculated and presented. As used in this press release, GAAP refers to generally accepted accounting principles in the United States of America. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

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