Omega Healthcare Investors (NYSE: OHI) raised its earnings guidance despite the bankruptcy filing of its nursing home tenant, Genesis Healthcare, with executives on Friday citing confidence in the company’s reorganization plans and ability to meet rent obligations.

“With our strong acquisition pipeline, a favorable operating environment and over $2 billion in liquidity with very low leverage, we are ideally positioned to grow both our senior housing and skilled nursing portfolios,” said CEO Taylor Pickett during the company’s second quarter earnings call on Friday.

For the second quarter of 2025, Omega reported adjusted funds from operations (AFFO) of 77 cents per share, reflecting strong revenue and EBITDA growth, fueled by acquisitions and active portfolio management.

In addressing Genesis’ July Chapter 11 filing, Pickett said Omega supports a bid to buy assets via Section 363 bankruptcy sale process, while expecting to continue receiving full monthly rent. 

Omega’s core portfolio includes 1,032 facilities, 62% of which are skilled nursing facilities and other transitional care facilities.

Genesis Chapter 11 filing aims to create “an entity that is operationally solvent and sustainable,” and Omega’s $52 million in rent from Genesis’ 31-facility lease is stable, Chief investment officer, Vikas Gupta said. The Genesis bankruptcy process may take “nine to twelve months,” to complete, subject to legal and other considerations, he said.

In the meantime, Omega is providing up to $8 million in debtor-in-possession financing to Genesis, and it also holds a $121 million secured term loan with Genesis, he said. 

In the previous quarter, Omega had noted that Genesis Healthcare hadn’t paid its full contractual rent of $4.2 million in March, with Omega partially pulling a letter of credit to cover the shortfall.

Omega raised and narrowed its 2025 AFFO guidance to a range of $3.04 to $3.07 per share, up from $2.95 to $3, citing strong second quarter 2025 earnings and the issuance of $600 million in five-year bonds. Pickett stated that balance sheet metrics remained “very strong,” with nearly $1.2 billion in adjusted annualized EBITDA and $4.3 billion in net funded debt. 

Omega shares closed Friday at $39.95, up $1.05, or 2.70%.

Staffing dynamics and OBBBA’s impact

Staffing dynamics for operators of the Hunt Valley, Maryland-based real estate investment trust (REIT) also remain favorable, according to Senior Vice President of Operations Megan Krull.

Wages are stable and any increases currently are mostly tied to inflation, Krull said. Moreover, there is wage parity across its senior housing and SNF portfolios.

And while the labor pressures have decreased, frontline clinical staff has been more challenging compared to other roles, she noted.

“The CNAs are always a little bit more of a difficult piece of things, just because of where the states have pushed the minimum wages,” Krull said, adding, however, “You just have to entice people to the culture that you build … you want to attract the people who are looking to help people, and so I think it hasn’t been as much of an issue that we’ve seen recently.”

Krull also addressed the negative impact of the One Big Beautiful Bill Act (OBBBA) on the skilled nursing sector as minimal. 

“As an industry, there’s a lot to be thankful for,” Krull said. “[S]killed nursing was specifically carved out from any Medicaid reductions,” she said, calling this “a major win for the industry associations and operators.”

That said, provider taxes for hospitals and Medicaid cuts to the Affordable Care Act’s (ACA) expansion population could have indirect impacts on the sector.

“A reduction in the overall federal funding of Medicaid to the states… may cause states to evaluate all programs,” she said. Still, “we feel well positioned to weather that potential storm,” she added. 

Finally, Krull expressed optimism over the OBBBA’s 10-year moratorium on the implementation of the staffing requirements of the staffing mandate, and pointed to recent court decisions striking down CMS authority on federal staffing minimums, which, she said, “seems more likely than not” to be upheld.

‘Active portfolio management’

Omega executives also explained that their active portfolio management was the reason behind the REIT’s confidence for continued earnings growth. This is done through removing operators that don’t mesh well together, bringing in better-suited ones, and exploring various deal structures to boost value, they stated. 

“We are actively looking at operators and facilities that maybe don’t align, working with operators to get them out of facilities that maybe don’t, shouldn’t be part of their core portfolio, and then sourcing other operators that are more suited to run those facilities,” said President Matthew Gourmand. “Often that presents an opportunity for either risk mitigation or even rent pickup in those situations … to potentially benefit from the further upside that we think will happen in both skilled nursing and senior housing facility operating metrics over the next 10 plus years.”

In Omega’s portfolio mix, senior housing continues to grow, Pickett said, with senior housing now including 396 facilities, or 38% of the total, with growth supported by “a strong acquisition pipeline” and over $2 billion in liquidity.

Omega executives highlighted continued strength in their investment pipeline.

“It’s just as strong as it has been. It continues to be strong,” Gupta said, noting a consistent yield target. “We continue to push 10% [yield] across the board for all of those asset classes.”

Moreover, sales of properties are expected to remain limited, Gupta said. “Any sales at this point forward are usually just strategic sales … but otherwise we have no sales on the horizon.”

In terms of investment opportunities, the landscape remains the same, Gupta said.

“For who we see out there, it hasn’t really changed,” he said, adding that more private equity presence is still in place.

Year-to-date through June, Omega made over $605 million in new investments, 93% in real estate. This includes a $344 million U.K. portfolio of 45 care homes and $158 million across 12 U.S. facilities, mostly SNFs.

Gupta emphasized a “very favorable” second-half 2025 pipeline, with strong opportunities in both SNFs and senior housing, and said Omega remains focused on investments that are “immediately accretive” with upside potential from improving cash flows.

PACS, Genesis and other tenant performance

On occupancy and operator performance, executives said that the general trajectory is positive, based particularly on April and May preliminary results, leading to expectations of higher overall coverage rates next quarter.

Omega executives also highlighted Maplewood’s occupancy improvement, noting that the senior housing operator paid $6.1 million most recently.

“Overall, Maplewood is doing a great job. Occupancy in New York is at 93%. They’re going to keep pushing that occupancy rate, and we’re just hoping for further improvement,” Gupta said.

As for its tenant PACS, which has been a source of negative news, executives said they weren’t expecting any downside to earnings from it.

“As an operator, we find PACs to be clinically strong,” Gupta said. “We continue to have strong coverages with them. So from our perspective, it’s an odd event at this point.”

PACS is currently undergoing an internal and federal investigation into its billing practices.

Omega executives also remained confident that as Genesis undergoes reorganization as part of its Chapter 11 bankruptcy, the nursing home giant will retain its 31 assets that are currently under Omega’s master lease.

“It’s a master lease … They’d have to reject all 31 highly desirable assets with really good coverage that I would say is the best portfolio in that Genesis entity. So the idea of going through a reorganization without that portfolio, I don’t think makes any sense,” Pickett said. ”There are a handful of [Genesis] facilities, particularly in the Northeast, that we’ve exited – very tough markets. What we have left with them is mid-Atlantic, principally, and really strong coverages with a lot of good visibility for growth.”