Omega Healthcare Investors, Inc.

Greetings. Welcome to the Omega Healthcare Investors First Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After today's presentation, there will be a brief question and answer session. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to Michelle Reber. You may now begin, Michelle.

Thank you and good morning. With me today is Omega's CEO, Taylor Pickett, COO, Dan Booth, CFO, Bob Stevenson, and Megan Krull, Senior Vice President of Operations. Comments made during this conference call that are not historical facts may be forward-looking statements, such as statements regarding our financial projections, potential transactions, operator prospects, and outlook generally. Factors that could cause actual results to differ materially from those in the forward-looking statements are detailed in the company's filings with the SEC. During the call today, we will refer to some non-GAAP financial measures, such as NAVRED FFO, adjusted FFO, FAD, and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles are available in the quarterly supplement. In addition, Certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been independently verified by Omega. I will now turn the call over to Taylor.

Thanks, Michelle. Good morning and thank you for joining our first quarter 2024 earnings conference call. Today I will discuss our first quarter financial results and certain key operating trends. First quarter FAD, funds available for distribution, of 65 cents per share was better than expected and should continue to improve as several portfolios are in the process of being transitioned, which will result in meaningful fad upside over the next few quarters. Our dividend payout ratio of 103% remains slightly elevated, but should drop into the mid 90% range in the upcoming quarters. We continue to have a handful of cash basis operators including Maplewood and Levee, that will impact our go-forward AFFO and FAD, making full-year 2024 FAD difficult to predict. However, longer term, we believe all these assets, but in particular Maplewood, are well positioned to generate reliable and growing cash flows and related rent. Although first quarter AFFO of 68 cents per share was strong, we've elected to remain conservative with respect to our full-year guidance, And accordingly, we are maintaining our 2024 AFFO guidance of between $2.70 and $2.80 per share. As Dan will discuss, key tenant occupancy and rent coverage metrics continue to improve. The under one times EBITDAR coverage operator metric moved up slightly from 13.2% of total rent to 14.5% of total rent. due to a 3.3% operator that moved from slightly above 1.0 times coverage to slightly below 1.0 times coverage at 0.98 times EBITDA coverage. We expect this operator to eventually move back above 1.0 times coverage due to state Medicaid rate increases, leaving a balance of 11.2% of below 1.0 times coverage operators. In looking at the 11.2% balance of below one times operators, we can break the 11.2% into a handful of buckets. Operators representing 6.2% of the 11.2% are strong credits and therefore payment of rent should not be an issue. Operators representing 2.2% have fourth quarter and January EBITDA coverage above 1.0 times or are benefiting from state rate increases and operational improvements that we expect to continue on a go-forward basis. That leaves operators representing just 2.8%, consisting of eight small operating relationships. Lastly, the government has issued its final rule for skilled nursing facility minimum staffing. Unfortunately, many of the constructive industry ideas and comments that include the use of technology and certain best practices were not included in the final rule. As there is a long lead time for the implementation of the final rule, we remain cautiously optimistic that the rule will be improved over the next couple of years. I will now turn the call over to Bob.