Executives at Omega Healthcare Investors (NYSE: OHI) said the company’s third quarter was marked by operational improvements and high occupancy, enabling the company to pursue additional investments, as they shared details on its latest $222.4 million joint venture with affiliates of Saber Healthcare.

CEO Taylor Pickett lauded the Saber deal as one of a kind.

“They’re essentially the private Ensign, and they’re set up to grow really significantly in a very creative way over the next five plus years,” Pickett said during the company’s third quarter conference call, likening Saber’s model to the publicly traded Ensign Group (Nasdaq: ENSG). “We’re really excited to be part of that because [there’s] upside in our investment, plus the yield we’re getting on that investment is really remarkable, and we’ll see how that plays out. That being said, are there a lot of Sabers out there? No.” 

Saber, which has been Omega’s operating partner for over a decade, is known for its strong clinical focus and sustainable financial performance, said President Matthew Gourmand, adding that the investment is expected to provide a minimum 8% annual yield and internal rate of return (IRR) that will exceed the “low- to mid-teens target over time.”

As part of the deal with Saber, Omega will own and lease 64 skilled nursing facilities previously wholly owned by Saber. Omega executives also discussed the $9.9 million equity investment in Saber’s parent company, saying that it underscored its strategy of diversifying investment structures and forming strategic partnerships.

“We believe we are extremely well positioned to enhance shareholder returns by acquiring underperforming assets at prices meaningfully below replacement cost and partnering with proven operators to significantly enhance the cash flow, and hence, value of such assets,” Gourmand said.

During the quarter, Omega invested a total of $978 million in new assets, reinforcing confidence in its capital allocation strategy and long-term growth outlook.

Omega posted funds from operations (FFO) of $0.79 cents per share during the third quarter, above analysts’ consensus estimate of $0.75 cents a share, with the company raising full-year 2025 FFO guidance to $3.08 to $3.10 per share, reflecting 8% year-over-year growth.

Omega’s EBITDA coverage rose to the company’s strongest level in 12 years.

On Friday, Omega shares closed at $42.03, up $2.14, or 5.36%.

According to BMO Capital Markets data, the Maryland-based company’s occupancy increased by 40 bps quarter over quarter to 82.6%, while the Medicaid mix decreased by 30 bps sequentially to 50.2%.

Omega’s core portfolio consists of 1,024 facilities, of which around 60% percent are skilled nursing facilities and other transitional care facilities in the U.S., while the other 40% is U.S.-based senior housing and U.K.-based care homes.

The Saber deal and investment philosophy

In connection with the Saber real estate joint venture, Omega agreed to invest $93 million for a 9.9% equity stake in Saber Healthcare Holdings, which operates 139 facilities. The transaction, expected to close in January 2026, establishes a unique structure aligning Omega as a key capital partner with Saber as a leading operator, company executives said.

Combining Omega’s capital strength with Saber’s operational expertise positions both companies for joint growth and shared success in the skilled nursing sector, said Chief Investment Officer Vikas Gupta.

Over the past year, Omega has selectively made investments in real estate capital structures, earning yields above cost of capital with additional upside upon sale or recapitalization, Gourmand added.

The Saber transaction was a model for achieving strong long-term returns despite lower initial yields, he said, noting the company’s interest in pursuing further opportunities in both the U.S. and U.K.

Omega now holds a 49% equity interest in the Saber joint venture portfolio.

Omega’s plans to target health care real estate acquisitions and expand investment in joint ventures, minority equity stakes, and right-to-use arrangements, Gourmand said.

Genesis updates

On Genesis HealthCare, Gupta noted continued improvement in Genesis’ credit metrics and progress in its bankruptcy process.

Currently, Omega earns rent from 31 Genesis facilities for $52 million in annual rent payment. Additionally, Omega has a $125 million term loan with Genesis, he said.

“Based on our lease coverage and collateral, we believe our credit position in this portfolio is strong,” Gupta said. “The bankruptcy process is progressing with a few milestones approaching, including the auction of the Genesis assets. In the sale approval hearing, we expect this will result in our lease being assumed by Genesis and assigned to the winning bidder, as previously reported.”

Omega had committed to support Genesis by providing an $8 million in debt-in-possession financing as part of a total $30 million debtor-in-possession loan.

“We’ve now fully funded our $8 million commitment. Genesis has paid Omega full contractual rent each month since filing for bankruptcy,” Gupta said.

The bankruptcy process is anticipated to conclude in the first or second quarter of 2026, subject to court approval, Gupta added.

Impact from federal actions and shutdown

Addressing regulatory and policy developments, Senior Vice President of Operations Megan Krull said that although the timing of the federal government shutdown’s end is uncertain, it has had little effect on long-term care funding.

The so-called One Big Beautiful Bill Act’s (OBBBA) initiatives could have some impact, however.

“Given the current state of affairs, the automatic 4% cut in Medicare to occur in early 2026 as the result of the deficit caused by OBBBA has not yet had a chance to be dealt with legislatively,” she said, adding that she remains optimistic that legislative action might thwart the cuts. “Such reductions have historically been avoided.”

Krull said Omega is monitoring state-level funding shifts while maintaining confidence in its strong fundamentals and favorable demographics.

“We continue to be grateful for the carve out of skilled nursing from the Medicaid reductions in the OBBBA, but we are also carefully watching the landscape as the hospital systems deal with the reductions coming their way, as this could cause states to reassess their allocation of funds amongst the various provider groups,” she said.