Investor Presentation. March 2018

Transcription

1 Investor Presentation March 2018

2 Forward-looking Statements and Non-GAAP Information This presentation may include projections and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements relate to future events and expectations and involve unknown risks and uncertainties. Omega s actual results or actions may differ materially from those projected in the forward-looking statements. For a summary of the specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, see Omega s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. This presentation may contain certain non-gaap financial information including EBITDA, Adjusted EBITDA, Total Adjusted Debt (a/k/a, Funded Debt), Adjusted FFO, FAD, Total Cash Fixed Charges and certain related ratios. A reconciliation of these non-gaap disclosures is available in the Exhibit to this presentation or on our website under Non-GAAP Financial Measures at Other financial information is also available on our website. Information is provided as of December 31, 2017, unless specifically stated otherwise. We assume no duty to update or supplement the information provided. 2

3 Omega Overview

4 Omega Overview: Key Credit Highlights Financial Strength Conservative leverage level with Funded Debt / Adj. Pro Forma EBITDA of 5.1x (4Q 2017) Consistent and stable free cash flow with strong fixed charge coverage of 4.1x (4Q 2017) Strong commitment to unsecured borrowing structure with ~$10.1 billion of unencumbered assets Minimal short-term debt maturities Positive ratings trajectory with history of upgrades and commitment to investment grade profile Significant liquidity with $1.03 billion of cash and credit facility availability at 2/14/2018 Portfolio Strength Strong core portfolio TTM rent coverage of 1.72x (EBITDARM) and 1.35x (EBITDAR) at 9/30/2017 Geographic and operator diversification with 74 operators across 41 states and the United Kingdom No upcoming material lease expirations and no material lease renewal risk Favorable near term supply and demand outlook Experienced Management Team Senior management team with average tenure of 17 years Proven ability to execute on strategies Proven ability to handle troubled assets 4

5 Omega Overview: Facility and Investment Overview at December 31, 2017 Omega is the largest SNF-focused REIT As of December 31, 2017, Omega s portfolio consisted of 973 (1) operating facilities Completed approximately $530 million of new investments in 2017 In 2017, completed 59 asset dispositions totaling over $290 million of net proceeds Evaluating over $300 million of potential asset sales in 2018 Facility Investment Statistics Rent/Interest Statistics Senior Housing, 17% Mortgage Notes 7% Direct Financing Leases 4% Other 4% Skilled Nursing/Transitional Care, 83% Rental Property 85% 1) Excludes facilities which are non-operating, closed and/or not currently providing patient services 5

6 Financial Overview: Shareholder Returns Total Growth Percentages 1/1/2004 to 12/31/2017 OHI Share Price: 195.2% RMZ Index: 97.7% Quarterly Dividends as of 2/15/ Year Total Growth: 6.5% 3 Year Total Growth: 24.5% 5 Year Total Growth: 46.7% Compounded Annual Growth Rates 1/1/2004 to 12/31/2017 Real Estate Investments: 18.8% Operating Revenue: 18.4% Adjusted FFO per Share: 10.3% OHI Share Price: 8.0% Dividend Yield at $0.66/Share Per Quarter 9.8% (based on closing price on 2/13/2018 of $26.96) Omega Share Price Growth, 12/ /31/2017 $46.00 $44.00 $42.00 $40.00 $38.00 $36.00 $34.00 $32.00 $30.00 $28.00 $26.00 $24.00 $22.00 $20.00 $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 6

7 Financial Overview: Shareholder Returns (cont d) Shareholder Returns Through 12/31/2017 (1) Dividends per Share and Return of Capital % Total Return Ann. Equiv. Ranking (2) 3 Year: (13.3%) (4.7%) 12 th 5 Year: 59.6% 9.8% 6 th 10 Year: 240.6% 13.0% 3rd (3) Total Dividends Ordinary (1) Income Tax Treatment ($) Tax Treatment (%) Return of (1) Capital Capital Gain (1) Distribution % Ordinary Income % Return of Capital % Capital Gain Distribution % 17.4% 0.0% % 9.2% 0.0% % 48.0% 0.0% % 13.6% 3.0% % 36.6% 1.6% $ $ 8.04 $ 2.81 $ % 25.6% 1.0% 1) Rounded to two decimals Omega's Total Returns vs Healthcare REIT Averages (4) (Years ending 12/31) 300.0% 250.0% 240.6% 200.0% 183.1% 150.0% 100.0% 50.0% 0.0% -50.0% 59.6% 58.7% 16.3% -13.3% 3 Year 5 Year 10 Year (5) Omega's Total Returns Avg. Total Returns of Healthcare REITs 1) Source of Total and Annualized Equivalent Returns: Bloomberg Comparative Returns 2) Source: Healthcare REIT rankings of Total Returns published by KeyBanc Capital Markets, December 31, ) Ranked 20 th among all 116 publicly traded equity REITs with at least 10 years of return history. Source: KeyBanc Capital Markets The Leaderboard, December 31, ) Healthcare REIT Averages based on Total Returns of the RMS G Index for the years shown per Bloomberg Comparative Returns 5) The 3 and 5 Year Healthcare REIT Total Returns are the composite returns as provided in the KeyBanc Capital Markets The Leaderboard, December 31, The 10 Year return is the simple average of the Total Returns of individual Healthcare REITs provided in the same Source. 7

8 Omega Overview: Quarterly Highlights 1Q 2018 Increased its quarterly common stock dividend rate to $0.66 per share Sold 3 facilities and had 3 mortgage loans paid off totaling $35 million in net cash proceeds 4Q 2017 Sold 34 facilities and had a mortgage loan repaid totaling $189 million in net cash proceeds Completed $40 million in new investments Invested $31 million in capital renovation and construction-in-progress projects Increased our quarterly common stock dividend rate to $0.65 per share 3Q 2017 Completed $203 million in new investments Sold 4 facilities totaling $12 million in net cash proceeds Transitioned Orianna s Texas portfolio to an existing operator Invested $36 million in capital renovation and construction-in-progress projects Increased our quarterly common stock dividend rate to $0.64 per share 2Q 2017 Sold 8 facilities totaling $45 million in net cash proceeds Invested $48 million in capital renovation and construction-in-progress projects Increased our quarterly common stock dividend rate to $0.63 per share Redeemed $400 million of 5.875% Senior Notes due 2024 Issued $550 million 10-year 4.75% Senior Notes and a $150 million 4.50% add-on to our 2025 Senior Notes Closed on a new $1.8 billion unsecured, multi-currency credit facility Completed $134 million of new investments 1Q 2017 Completed $8 million in new investments Sold 15 facilities totaling $46 million in net cash proceeds Increased our quarterly common stock dividend rate to $0.62 per share Invested $30 million in capital renovation and construction-in-progress projects 8

9 Omega Overview Proven Track Record of Growth and New Investments Omega s Growth Strategy Continue to pursue selective investments 2004 New Investments: $126 million 2005 New Investments: $311 million 2006 New Investments: $203 million 2007 New Investments: $ 46 million 2008 New Investments: $197 million 2009 New Investments: $292 million 2010 New Investments: $638 million 2011 New Investments: $365 million 2012 New Investments: $510 million 2013 New Investments: $621 million 2014 New Investments: $566 million 2015 New Investments: $507 million (1) 2016 New Investments: $1,328 million 2017 New Investments: $530 million $6.2 billion (2) Additionally, the Company has approximately $299 million committed to its operators for capital improvement and new construction projects to be completed over the next months (as of 12/31/2017) Continue to pursue accretive transactions Leverage existing 74 operator relationships Invest primarily in current core markets Maintain focus on senior care facilities Use credit facility to make acquisitions and replenish availability with long-term debt and equity issuances Approximately $1.03 billion of combined cash and credit facility availability as of February 14, ) Investments exclude the approximate $3.9 billion acquisition via merger of Aviv REIT on April 1, ) Excludes investments made by Aviv prior to acquisition via merger by Omega 9

10 Demographics to Drive Growth

11 Industry Overview: Demographic Tailwinds Expected to Drive Occupancy Growth for Next 20 Years The SNF industry has been battling with unfavorable demographics for more than a decade with the aging of the "baby bust" generation Based on natality and SNF utilization information, we believe the industry is at the beginning of a 20+ year secular tailwind This belief is based on the following (as the subsequent slides illustrate): Medicare utilization of SNFs materially increases from 75 years old This utilization increases through their late 80's "Baby boomers" started turning 75 in 2016 The age 75+ cohort will grow on both an absolute and relative basis through at least 2040 as the baby boomers replace the baby bust generation within the 75+ population The percentage of hospital discharges to SNFs has remained steady in recent years, suggesting SNFs are in a prime position to benefit from this demographic wave 11

12 SNF Days per 1,000 Beneficiaries Industry Overview: Significant Increase in SNF Utilization by Those Aged 75+ SNF Utilization by Age ,000 6,000 Average Annual Increase in SNF Utilization by Age (Per 1,000 Beneficiaries) From age 65 to days per year 5,000 From age 75 to days per year 4,000 3,000 2,000 1, Source: Avalere analysis of Medicare Part A 100% Standard Analytic File (SAF) for

13 Births (000 s) Industry Overview: Baby Boomers Started Turning 75 in ,500 U.S. Birthrates, 1909 to ,000 3,500 3,000 2,500 2, to 1940 Avg. 2, to 1964 Avg. 3,767 1,500 Source: 13

14 3.0% 2.4% 1.9% 1.8% 1.9% 1.9% 3.0% 2.8% 2.1% 4.0% 3.3% 2.9% 4.4% 4.1% 5.5% 4.8% 5.7% 5.1% 4.5% 4.3% Industry Overview: Continued Significant Growth of 75+ as Percentage of Total U.S. Population Age 65+ Cohorts as a Percentage of the Total U.S. Population 6.0% 5.0% 4.0% 3.0% % (18.8MM) % (22.7MM) % (32.5MM) % (40.2MM) 2.0% 1.0% 0.0% Age Cohort by Year Note: Percentages represent percentage of total US population Source: U.S. Census 2010, Weldon Cooper Center for Public Service, Demographics Research Group 14

15 Industry Overview: Percentage of Hospital Discharges to SNFs has Remained Steady in Recent Years 25.0% Medicare FFS Hospital Discharge Destinations, (excludes discharges back to patients homes without home health) 20.0% 15.0% 19.3% 19.8% 20.2% 20.3% 20.0% 16.4% 16.8% 16.8% 17.0% 17.2% Skilled Nursing Facilities Home Health Care 10.0% 5.0% 0.0% 6.0% 6.1% 6.2% 6.2% 6.1% 3.3% 3.4% 3.4% 3.3% 3.3% 2.7% 2.8% 2.9% 3.0% 3.0% Other (Incl. IRF & LTACH) Death Hospice Source: Avalere analysis of Medicare Standard Analytic File (SAF) for the period

16 SNF Industry and Reimbursement Overview

17 Attractive Fundamentals: Primary PAC Site SNFs preferred post-acute care environment with growing demand and limited supply SNFs 49% Medicare Acute Hospital Discharges 43% Sent to Post-Acute HHAs 39% IRFs 9% LTACHs 3% Source: MedPAC Data Book, June

18 Growth in SNF Census, by Age Cohort Aging demographics would drive SNF occupancy beyond capacity in less than 10 years without efforts to reduce lengths of stay and increased utilization of alternative care sites. Number of SNF Residents (000's) 2,500 2,400 2,300 2,200 2,100 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, % < % < % < % < , < % Occupancy < Maximum current SNF capacity Source: CMS Nursing Home Data Compendium (2015 Edition) for percentage of SNF residents by age cohort and US Census Bureau data for population growth projections by age cohort. 18

19 Beds & Patients Certified Facilities Industry Overview: Attractive Fundamentals Supply of facilities and beds to meet increasing future demand is limited due to CON restrictions, increasing occupancy prospects for existing facilities Trend in Certified Nursing Facilities, Beds and Residents (figures in 000s, unless otherwise indicated) 1,700k 1,650k 1,600k 1,550k 1,500k 1,450k 1,400k 1,350k 16.0k 15.9k 15.8k 15.7k 15.6k 15.5k 15.4k 15.3k 15.2k 15.1k 1,300k Dec '09 Dec '10 Dec '11 Dec '12 Dec '13 Dec '14 Dec '15 Dec '16 Dec '17 Certified Beds 1,667k 1,670k 1,665k 1,667k 1,666k 1,663k 1,662k 1,662k 1,662k Patients in Certified Beds 1,400k 1,394k 1,384k 1,383k 1,372k 1,368k 1,357k 1,347k 1,337k Certified Facilities 15.7k 15.7k 15.6k 15.7k 15.7k 15.6k 15.7k 15.7k 15.7k 15.0k Source: Compiled by American Health Care Association (AHCA) Research Department from CMS OSCAR/CASPER survey data ( ) 19

20 Industry Overview: Attractive Fundamentals Occupancy Rate Trends 95.0% SNF Industry and Omega Portfolio Occupancy Trends 2009 through 2017 (1) 90.0% 85.0% 80.0% 75.0% 70.0% 65.0% OHI Occ. % 84.6% 84.1% 84.0% 83.4% 83.3% 84.5% 82.5% 82.2% 82.2% Industry Occ. % 84.0% 83.4% 83.1% 82.9% 82.3% 82.3% 81.6% 81.1% 80.5% OHI Occ. % Industry Occ. % Source: Industry data compiled by AHCA Research Department from CMS OSCAR/CASPER survey data ( ) 1) OHI occupancy reflects inclusion of legacy Aviv REIT facilities 20

21 Industry Overview: Reimbursement Outlook Medicare Growth in alternative payment models expected to continue under new DHHS/CMS leadership, but at a slower pace and with an emphasis on voluntary participation. Inflationary increases for fee-for-service PPS rates fixed at 2.4% effective October 1, 2018, due to February 2018 budget legislation that permanently repealed Part B therapy caps. Such increases to be reduced, pursuant to 2014 PAMA legislation, by Value-Based Purchasing discounts, net of rehospitalization performance rebates, projected to average 0.6% for Omega s portfolio. Potential fee-for-service payment reform commencing October 2018 would eliminate PPS RUG-based payments and use alternative Resident Classification System (RCS), effectively reducing payments for therapy services while enhancing payments for complex nursing care and incentivizing lower lengths of stay; overall budget neutrality expected. Medicaid 2017 Congressional legislative efforts to repeal/replace ACA and incorporate Medicaid payment reform failed, leaving existing SNF funding under federal matching program intact. Omega's geographic diversification helps minimize impact of rate changes in any particular state Average Medicare and Medicaid Rates by Quarter for Omega s Entire Portfolio (1) (through September 30, 2017) $500 $480 $460 $440 $420 $400 $380 $360 $340 $320 $300 Medicare PPD $215 $205 $195 $185 $175 $165 $155 $145 $135 $125 $115 Medicaid PPD 1) Rate for each month is calculated by dividing total Portfolio Operator Medicare/Medicaid revenues by total Portfolio Operator Medicare/Medicaid days. 21

22 Portfolio Overview

23 Portfolio Overview: Summary As of December 31, operating healthcare facilities, located in 41 states and the UK, operated by 74 thirdparty operators Gross real estate investments of approximately $8.8B Focused on leasing long-term care facilities (primarily skilled nursing facilities) to strong regional and local operators Long term triple-net master leases with cross collateralization provisions Strong credit profiles Security deposits of three to six months Monthly reporting requirements Property level expenses are operator s responsibility (labor, insurance, property taxes, capital expenditures) Omega receives fixed rent payments from tenants, with annual escalators Operators receive revenues through reimbursement of Medicare, Medicaid and private pay for services 23

24 Portfolio Overview: Facility Map at December 31, 2017 (No. of Operators No. of Facilities) Operators: 74 (1) Facilities: 973 (2) States: 41 (3) Foreign Countries: 1 (UK) 4 18 WA 1 1 VT 1 2 MT 1 3 NH 1 3 MN 4 8 ID 5 7 WI SD 3 6 NV 2 9 IA 1 7 NE IL IN UT 3 14 CO 3 10 AZ 1 8 NM 1 1 NY MI 3 49 WY 8 54 CA ME ND 3 6 OR 3 16 KS 4 9 OK 5 19 MO OH 4 11 WV NC 8 40 TN 4 31 AR 2 9 AL NJ 1 6 CT 1 4 RI 2 12 MD VA 3 31 KY 3 19 MS TX 7 42 PA 2 10 MA 5 13 GA United Kingdom 3 22 SC 2 13 LA FL 2 53 State Concentration Key <10 facilities 10 to 20 facilities >20 facilities 1) Many operators have facilities in multiple states 2) Excludes non-operating facilities, closed and/or not currently providing patient services 3) Includes New York City 2nd Avenue development project 24

25 Portfolio Overview: Omega Geographic Diversification as of December 31, 2017 Rent/Interest Concentration by Location ($ in thousands) 4Q 2017 Other States 38.0% Florida 9.6% Annualized Rent/Interest (1) Location Total $ % of Total Properties (2) Operators (3) 1. Florida 83, % Texas 76, % Ohio 75, % Michigan 59, % Indiana 58, % California 43, % Pennsylvania 43, % United Kingdom 35, % Tennessee 34, % North Carolina 26, % 31 6 Other States 328, % 359 $ 864, % ) 4Q 2017 rent and debt service annualized (includes mezz and term loan interest) 2) Properties excludes facilities which are non-operating, closed and/or not currently providing patient services 3) Many operators have facilities in multiple locations North Carolina 3.1% Tennessee 4.0% California 5.0% Pennsylvania 5.0% United Kingdom 4.1% Texas 8.8% Indiana 6.7% Ohio 8.7% Michigan 6.9% 25

26 Portfolio Overview: Omega Operator Diversification as of December 31, 2017 Rent/Interest Concentration by Operator ($ in thousands) Ciena, $86.4MM 4Q 2017 Annualized Rent/Interest (1) Total $ % of Total Properties (2) 1 Ciena $ 86,360 10% 70 2 Genesis 59,588 7% 50 3 Signature 56,738 7% 60 4 Communicare 54,939 6% 38 5 Orianna 46,591 5% 42 6 Saber 40,741 5% 44 7 Maplewood 35,831 4% 14 8 HHC 35,234 4% 44 9 Guardian 29,998 4% Diversicare 28,746 3% 35 Remaining 64 Operators 389,770 45% 545 $ 864, % 973 Remaining 64 Operators, $389.8MM Genesis, $59.6MM Signature, $56.7MM Communicare, $54.9MM Orianna, $46.6MM Saber, $40.7MM 1) 4Q 2017 rent and debt service annualized (includes mezz and term loan interest) 2) Properties excludes facilities which are non-operating, closed and/or not currently providing patient services 3) Many operators have facilities in multiple locations Diversicare, $28.7MM Guardian, $30.MM Maplewood, $35.8MM HHC, $35.2MM 26

27 Portfolio Overview: Capital Investment Summary as of December 31, 2017 Fac. # Commitment Year Location # of Projects Property Type Initial Cash Yield Beds / Units Investment Commitment Inception to Date Funding (1) Remaining Commitment Estimated In Service Date Estimated Additional Quarterly Rent (2) Middleburg, FL 1 SNF 9.00% ,750,000 6,265,068 11,484,932 Sep , nd Avenue, NY 1 ALF / MC 7.00% ,628, ,400, ,228,188 Q4 19 2,544, Pensacola, FL 1 SNF 8.75% 90 21,171,638 19,350,279 1,821,359 Feb , Polk County, FL 1 SNF 9.00% ,000,000 12,537,807 5,462,193 May , Brunswick, NC 1 SNF 9.00% ,650,000 10,764, ,802 Mar , Pensacola, FL 1 SNF 8.75% 90 19,500,000 1,593,638 17,906,362 TBD 34, Viera, FL 1 SNF 8.75% ,500,000 6,637,259 19,862,741 Mar , Southport, CT 1 ALF 9.00% 98 36,146,285 4,049,050 32,097,235 Jun-19 91, Lake City, FL 1 SNF 8.75% ,600,000 1,982,423 21,617,577 TBD 43, Mocksville, NC 1 SNF 9.25% ,200,000 2,186,715 10,013,285 Jan-19 50,568 Leased Facilities 10 1,184 $ 436,146,403 $ 210,766,729 $ 225,379,674 $ 3,998, Watkins, VA 1 ALF 8.75% 48 11,700,000 8,548,720 3,151,280 Sep St. Clair Shores, MI 1 SNF 9.50% ,000,000 7,439,548 9,560,452 Mar Westland, MI 1 SNF 9.50% ,000, ,968 9,790,032 TBD - Mortgages (3) $ 38,700,000 $ 16,198,236 $ 22,501,764 Additional CapEx (excluding New Builds) (3) ,402, ,620,775 50,781,445 Total: 98 1,453 $ 682,248,623 $ 383,585,740 $ 298,662,883 1) Includes land and finance costs 2) Inception to date funding multiplied by initial cash yield 3) Current quarter revenue already reflects funding as of December 31,

28 Portfolio Overview: Omega s Strong Portfolio Rent Coverage Period Trailing Twelve Months (TTM) Period Trailing Twelve Months (TTM) Ending EBITDARM EBITDAR Ending EBITDARM EBITDAR 03/31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ /31/ /31/ /31/ /30/ /30/ /30/ /30/ /31/ (1) 1) Prior to 2015, Rent Coverages were reported to one decimal. TTM EBITDARM & EBITDAR Coverage 3/31/2002 to 9/30/2017, Quarterly EBITDARM EBITDAR

29 Portfolio Overview: Omega Lease and Mortgage Revenue Expirations as of December 31, 2017 Minimal Near Term Expirations Approximately 89% of portfolio expirations occur after 2022 Combined EBITDAR coverage of lease and mortgages expiring through 2022 is 1.09x (1) 70.0% 61.5% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 11.1% 7.5% 6.9% 1.2% 0.4% 1.5% 0.8% 4.2% 2.6% 2.3% Thereafter Note: Expiration percentages based on 4Q 2017 contractual rents and interest, annualized. 1) Operator coverage data as of September 30,

30 Financial Overview

31 Financial Overview: Consistent Financial Policy Conservative capitalization 4Q 2017 (unless otherwise noted) Debt to adjusted proforma EBITDA ratio: 5.13x (see 4Q Financial Supplement (1) ) Significant liquidity $1.25B revolving credit facility: $1.0 billion of availability (as of February 14, 2018) Well-laddered debt maturities: No material maturities until 2022 (assuming allowable credit facility extensions) Financial flexibility Capital markets access Minimize encumbered assets 0.8% of Total Assets Funded Debt to Total Asset Value: 50% (determined pursuant to Bond Covenants) Adjusted Fixed Charge Ratio >3.5x: 4.1x (see 4Q Financial Supplement (1) ) Dividend payout ratios (2) AFFO Payout Ratio: 83.7% (4Q 2017) FAD Payout Ratio: 91.9% (4Q 2017) 22 consecutive quarterly dividend increases: $0.66 as of 1Q ) Quarterly Financial Supplements are located in the Investor Relations tab at 2) Historically, the Company has maintained AFFO and FAD payout ratios of less then 85% and 90%, respectively. The Company anticipates returning to similar historical levels post its strategic asset repositioning efforts. 31

32 Financial Overview: Long-Term Growth Strategy Pursue selective acquisitions Leverage existing 74 operator relationships Invest primarily in current core markets Maintain focus on senior care facilities Use credit facility to make acquisitions and replenish availability with long term debt and equity issuances 32

33 Financial Overview: Investment History ($ in thousands) Investments through December 31, 2017 Over $5.0 billion of new investments since January, 2010 (1) 1,400,000 Other (3) CIP (2) Capex Mortgages Acquisitions 1,200,000 1,000, , ,000 (1) 400, , Acquisitions 114, , ,000 39, , , , , , , , , , ,246 Mortgages 6,500 61, ,000 3,509 20, ,041 11,969 3, ,307 47,696 31,482 11,000 Capex 5,536 3,821 6,805 6,187 14,683 18,609 28,403 18,896 29,436 56,289 21,514 52,295 41,033 59,424 CIP (2) ,197 78,432 Other (3) , ,367 16,625 Total 126, , ,805 46, , , , , , , , ,944 1,328, ,609 1) Excludes $3.9B Aviv acquisition via merger by Omega on April 1, ) Included in Acquisitions prior to ) Consists primarily of mezzanine and JV investments 33

34 Financial Overview: Attractive Growth Profile Gross Investments (1) Core Operations Revenue $459M YTD through 3Q:17 (1) $687M YTD through 3Q:17 (1) ($ in billions) ($ in millions) $10.00 $1,000 $9.00 $8.00 $7.00 $8.11 $9.17 $9.09 $900 $800 $700 $744 $901 $908 $6.00 $600 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 $4.47 $3.92 $3.33 $2.50 $2.83 $1.80 $0.94 $1.13 $1.29 $1.32 $ $500 $400 $300 $200 $100 $0 $505 $419 $350 $292 $251 $110 $136 $160 $170 $179 $ ) See our 4Q Financial Supplement posted on our website, 34

35 Financial Overview: Attractive Growth Profile Adjusted EBITDA (1) Adjusted Funds from Operations (2) $667.7M YTD through 3Q:17 $519.3M YTD through 3Q:17 ($ in millions) ($ in millions) $1,000 $800 $900 $700 $800 $700 $600 $600 $500 $500 $400 $300 $200 $100 $0 $870 $882 $716 $334 $236 $279 $101 $127 $145 $159 $170 $402 $ $400 $300 $200 $100 $0 $689 $683 $564 $236 $193 $52 $77 $91 $109 $123 $156 $299 $ ) Reflects adjustments for nursing home revenues and expenses, nonrecurring items, restricted stock amortization, provisions for impairment, provisions for uncollectible accounts, and adjustments to fair value (see Exhibit I Adjusted EBITDA Reconciliation ) 2) See the Funds from Operations walk-down in our 4Q Earnings Release 35

36 Financial Overview: Conservative Capitalization Target Funded Debt to Adjusted EBITDA Ratio of 4.0x 5.0x Typically have used drawings under the revolver to make acquisitions and replenished revolver availability with long term debt and equity issuances Leverage (1) (2) Cash Fixed Charge Coverage (3) 6.0x 5.0x 4.0x 3.0x 4.3x 5.08x for 3Q:17 Annualized 4.2x for 3Q:17 5.0x 4.8x 4.9x 4.7x 4.6x 4.7x 4.0x 4.1x 4.4x 4.5x 4.0x 3.5x 3.3x 3.1x 3.0x 6.0x 4.7x 5.1x 4.5x 2.0x 2.0x 1.0x 0.0x 0.9x 0.9x 0.7x 0.6x 0.5x 0.3x 0.1x 0.1x x 0.0x Total Debt / Adj. EBITDA Secured Debt / Adj. EBITDA 1) Adjusted annualized proforma EBITDA includes revenue for all new investments as if they occurred January 1 of their respective year. Debt amounts exclude the fair value adjustments on HUD debt and the net premium or discount on the unsecured notes (See Selected Credit Statistics in our 4Q Financial Supplement posted on our website, 2) See Leverage Reconciliation in Exhibit 1 to this presentation 3) Reflects adjusted EBITDA divided by the sum of cash interest and preferred dividends, if any (See Selected Credit Statistics in our 4Q Financial Supplement posted on our website, 36

37 $ Millions Financial Overview: Conservative Capitalization Debt Maturity Schedule at 2/14/2018 $1.8B unsecured revolving credit and term loan facilities $1.25B revolver with a May 2021 maturity, and an additional one year option $665MM term loans $1.0B available as of February 14, 2018 $250MM Unsecured Term Loan No near term bond maturities Minimal secured debt $53.5MM of HUD (at 2/14/2018) 80% fixed rate debt outstanding at 2/14/2018 $2,300 $2,200 $2,100 $2,000 $1,900 $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 Credit Facility Term Loans $1.25B Revolving Credit Facility: $245M drawn at 2/14/2018 $20M Term $20MM Loan $250M Term Loan $100M $140M $425M Term Loan $1,005M Available $245M Drawn (1) $700M 4.375% Notes $400M 4.95% Notes $400M 4.50% Notes $600M 5.25% Notes $700M 4.50% Notes $550M 4.75% Notes Approximate balance of amortizing HUD Loans at 12/31/28 with final maturities to $38M 1) Represents the 100 million term loan at the spot exchange rate of approximately at 2/14/

38 Financial Overview: Conservative Capitalization Financial Covenant Review Strong balance sheet with significant cushion on all covenants Leverage ratios are key covenants Defined as Funded Debt to Total Asset Value and Unsecured Debt to Total Asset Value, both not to exceed 60%, were 51% and 53%, respectively, at 4Q 2017 Debt to Adjusted proforma EBITDA is 5.1x for 4Q 2017 (2) Quarter Ending Key Bond Covenants (1) Debt / Adj. Total Assets Unencumbered Assets / Unsecured Debt (1) Covenants are based on calculations as defined in the Company s Senior Note Indentures Key Credit Facility Covenants (1) Secured Debt / Adj. Total Assets Requirement <= 60% >= 150% <= 40% March 30, % 206% 0% June 30, % 200% 0% September 30, % 191% 0% December 31, % 190% 0% Status Pass Pass Pass Quarter Ending Leverage Ratio Secured Leverage Ratio Unsecured Leverage Ratio Consolidated Fixed Charge Cov. Ratio Unsecured Interest Cov. Ratio Current Tangible Net Worth Requirement <= 60% <=30% <= 60% >=1.50 to 1 >=2.00 to 1 >$3,399MM March 30, % 1% 50% Pass June 30, % 1% 54% Pass September 30, % 1% 55% Pass December 31, % 1% 53% Pass Status Pass Pass Pass Pass Pass Pass 1) Covenants are based on calculations as defined in the Company s Credit Agreement 2) See Selected Credit Statistics in our 4Q Financial Supplement posted on our website, 38

39 Financial Overview: Financial Flexibility Capital Markets Accessibility Seasoned market issuer Senior Unsecured Notes Rated BBB- by S&P and Fitch; Baa3 by Moody s Capital Market Activity, 2004 through December 31, ,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , , Senior Notes 260, , , , ,000 1,300, , ,000 Preferred Equity 118, Common Equity 74,909 68,019 33, , , , ,474 91, , , , , ,433 59,796 Totals 5,010, ,488 2,555,431 7,683,918 Note: Common Equity includes shares issued under Omega s DRIP/DSPP and Omega s ATM/ESP; 2015 Common Equity excludes 52.9MM combined shares and units issued for Aviv on April 1, 2015 (~$3.9B) 39

40 Financial Overview: Financial Flexibility (as of 4Q 2017) Minimize Encumbered Assets $10.2B of total undepreciated assets (over 99% unencumbered) $1.25B unsecured revolving credit facility $910MM unsecured term loans $3.35B of long-term bonds $54MM of 30+ year amortizing HUD loans Encumbered Assets as % of Total Gross Assets (000's) 4Q 2017 Actual Total Assets: 1 $8,773,305 Accumulated Depreciation: 1,376,828 Total Undepreciated Assets: $10,150,133 Encumbered Assets: 2 (85,257) Total Unencumbered Assets: $10,064,876 Encumb. Assets to Total Gross Assets: 0.8% 1) Includes intangibles and AR 2) Assets securing HUD loans 40

41 Total Yearly Dividend ($) AFFO Payout Ratio Financial Overview: Dividend History Historically Strong Dividend Growth with Conservative AFFO Payout Ratios 44 increases in 58 quarters since 2003 Increased dividend and AFFO during the financial crisis Confident in the sustainability of the current quarterly dividend rate of $0.66 per share $3.00 Yearly Dividends and AFFO Payout Ratio 2003 through 2017 (1) 100.0% $2.50 $2.00 $1.50 $1.00 $ % 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 78.4% (2) $ % Dividends AFFO Payout Ratio 1) As per page 12 in our 4Q 2017 Financial Supplement 2) Reflects the unweighted AFFO Payout average from 2003 through

42 Exhibits

43 Exhibit I: Non-GAAP Financial Reconciliation: Adjusted EBITDA Reconciliation Year Ended December 31, Net Income... $ 55,697 $ 69,374 $ 78,137 $ 82,111 $ 58,436 $ 52,606 $ 120,698 $ 172,521 $ 221,349 $ 233,315 $ 383,367 $ 104,910 Depreciation and amortization... 32,263 36,056 39,890 44,694 84, , , , , , , ,591 Depreciation and amortization unconsolidated joint venture ,107 6,630 Interest expense - net & refinancing costs... 47,611 44,092 39,746 39,075 90,602 86, ,096 92, , , , ,976 Provision for income taxes... 2,347 (7) (72) ,211 1,405 3,248 EBITDA , , , , , , , , , , , ,355 Nursing home revenues (24,170) (18,430) (7,336) Nursing home expenses ,601 20,632 7, Litigation/contractual settlement (526) (4,527) (1,111) (10,412) Acquisition costs ,561 1,554 1, ,948 57,525 9,582 (22) (Gain) loss on assets sold - net... (1,354) (1,993) (12,292) (753) 4 (1,670) (11,799) 1,151 (2,863) (6,353) (50,208) (53,912) Advocat non-cash accretion investment income... (1,280) Gain from sale of Sun common stock... (2,709) Advocat non-cash gain on investment restructuring... (3,567) Restatement expense... 1, Adjustment of derivatives to fair value... (9,079) Advocat one-time straight line adjustment... - (5,040) One-time cash revenue (702) (536) (1,405) (2,394) Deduct foreign currency gain (311) One-time non-cash deferred mortgage interest income (236) - (585) FIN 46R adjustment... - (296) (90) Settlement of prior operator's past due obligation (650) Gain on Sale of CSFB Mortgage Certificates (789) Provisions for real estate impairment ,416 5, , ,660 17,681 58,726 99,070 Impairment on direct financing leases ,199 Provisions for uncollectible mortgages, notes and A/R ,248 3,935-6,439-2,141 2,723 7,871 9,845 14,580 Restricted Stock amortization expense... 4,517 1,425 2,103 1,918 2,211 6,037 5,942 5,942 8,592 11,133 13,790 15,212 Adjusted EBITDA... $ 127,165 $ 145,027 $ 158,807 $ 170,375 $ 236,347 $ 278,849 $ 334,329 $ 401,704 $ 486,950 $ 716,294 $ 870,237 $ 882,365 Proforma Acquisition Income... 11,358 2,646 15,360 30,315 32,807 37,153 45,420 55,696 22,194 70,727 47,335 24,702 Proforma CIP Income ,568 Incremental Revenue from Orianna Transitioned Assets ,000 Incremental Revenue from Daybreak ,146 Proforma Revenue from Q4 Asset Divestitures (5,052) Adjusted Proforma EBITDA (1)... $ 138,523 $ 147,673 $ 174,167 $ 200,690 $ 269,154 $ 316,002 $ 379,749 $ 457,400 $ 509,144 $ 787,021 $ 917,572 $ 931,729 Cash Interest(2)... $ 42,174 $ 42,134 $ 37,745 $ 36,077 $ 67,282 $ 81,643 $ 95,822 $ 100,459 $ 119,153 $ 150,915 $ 170,516 $ 196,486 Preferred Dividends... 9,923 9,923 9,714 9,086 9,086 1, Total Fixed Charges... $ 52,097 $ 52,057 $ 47,459 $ 45,163 $ 76,368 $ 83,334 $ 95,822 $ 100,459 $ 119,153 $ 150,915 $ 170,516 $ 196,486 Adjusted EBITDA / Cash Fixed Charge coverage ratio x 2.8 x 3.3 x 3.8 x 3.1 x 3.3 x 3.5 x 4.0 x 4.1 x 4.7 x 5.1 x 4.5 x Adjusted Proforma EBITDA / Cash Fixed Charge coverage ratio x 2.8 x 3.7 x 4.4 x 3.5 x 3.8 x 4.0 x 4.6 x 4.3 x 5.2 x 5.4 x 4.7 x 1) Adjusted Proforma EBITDA assumes all new investments in each respective year had closed on January 1 of that respective year. 2) Excludes interest refinance costs such as early extingishment premiums and amortization of deferred financing costs. 43

44 Exhibit I: Non-GAAP Financial Reconciliation (cont d): Leverage Reconciliation Year Ended December 31, Funded Debt Revolving Line of Credit - secured... $ 150,000 $ 48,000 $ 63,500 $ 94,100 $ - $ - $ - $ - $ - $ - $ - $ - Revolving Line of Credit - unsecured , , ,000 85, , , ,000 Term Loan - secured , Term Loan - unsecured , , Term Loan - unsecured Trache , , , Term Loan - unsecured Trache , , Term Loan - unsecured Trache ,000 - $425M 2017 Term Loan ,000 $100M GDP Term Loan , OP Term Loan - unsecured , , , Yr Term Loan - unsecured , , ,000 HUD Debt - secured (1) , , , , ,881 56,204 54,955 53,666 GEMSA - secured , Other Borrowings - secured , Industrial Revenue Bonds - unsecured... 2,410 1, Subordinated Debt - unsecured (2) ,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Notes - unsecured (3)(4) , , , , , ,000 1,175,000 1,175,000 1,825,000 2,350,000 3,053,000 3,351,500 Total Funded Debt... $ 637,410 $ 534,995 $ 548,500 $ 738,454 $ 1,150,890 $ 1,522,058 $ 1,788,711 $ 2,001,425 $ 2,367,881 $ 3,586,204 $ 4,417,955 $ 4,625,296 Less: Cash on-hand... (729) (1,979) (209) (2,170) (6,921) (351) (1,711) (2,616) (4,489) (5,424) (93,687) (85,937) Adjusted Net Funded Debt... $ 636,681 $ 533,016 $ 548,291 $ 736,284 $ 1,143,969 $ 1,521,707 $ 1,787,000 $ 1,998,809 $ 2,363,392 $ 3,580,780 $ 4,324,268 $ 4,539,359 Secured Funded Debt (1) ,000 48,000 63, , , , , , , ,204 54,955 53,666 Unsecured Funded Debt (2)(3)(4) , , , , ,000 1,242,500 1,453,000 1,721,000 2,130,000 3,350,000 4,363,000 4,571,630 Less: Cash on-hand (729) (1,979) (209) (2,170) (6,921) (351) (1,711) (2,616) (4,489) (5,424) (93,687) (85,937) Adjusted Net Funded Debt... $ 636,681 $ 533,016 $ 548,291 $ 736,284 $ 1,143,969 $ 1,521,707 $ 1,787,000 $ 1,998,809 $ 2,363,392 $ 3,580,780 $ 4,324,268 $ 4,539,359 Net Debt/Adjusted Proforma Annualized EBITDA (2) x 3.6x 3.1x 3.7x 4.3x 4.8x 4.7x 4.4x 4.6x 4.5x 4.7x 4.9x Secured Funded Debt/Adjusted Proforma Annualized EBITDA (2) x 0.3x 0.4x 1.3x 0.7x 0.9x 0.9x 0.6x 0.5x 0.3x 0.1x 0.1x Notes: All debt shown above excludes deferred financing related costs. 1) HUD debt for December 31, 2014, 2013, 2012 and 2011 excludes 13.6 million, $18.1 million, $30.8 million and $24.1 million of adjustments related to the acquisition date fair value premium, respectively. 2) Subordinated debt for December 31, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 excludes $0.4 million, $0.5 million, $ 0.6 million, $0.7 million, $0.9 million, $1.0 million and $1.2 million of adjustments related to the acquisition date fair value premium, respectively. 3) Unsecured borrowings for 2006 and 2007 excludes FIN 46 debt of $39 million. 4) The 2016 and 2017 unsecured note balance includes $3.0 million and $1.5 million, respectively of notes payable to a seller related to the purchase price consideration. 44

45 Exhibit 2: Growth of Per Share AFFO, FAD and Dividends (10 Years) Quarter Ended Ending Share Price Div. * Yield AFFO/ Share Dividend Quarterly Payout Ratio FAD/ Share FAD Payout Ratio Omega AFFO Guidance (1) /31/2008 $ % $ $ % $ % $ $1.43 6/30/2008 $ % $ % $ % 9/30/2008 $ % $ % $ % AFFO/ Share % Change Annually FAD/ Share % Change Annual Dividend % Change 12/31/2008 $ % $ % $ % $ % $ % $ % /31/2009 $ % $ $ % $ % $ $1.50 6/30/2009 $ % $ % $ % 9/30/2009 $ % $ % $ % 12/31/2009 $ % $ % $ % $ % $ % $ % /31/2010 $ % $ $ % $ % $ $1.68 6/30/2010 $ % $ % $ % 9/30/2010 $ % $ % $ % 12/31/2010 $ % $ % $ % $ % $ % $ % /31/2011 $ % $ $ % $ % $ $1.86 6/30/2011 $ % $ % $ % 9/30/2011 $ % $ % $ % 12/31/2011 $ % $ % $ % $ % $ % $ % /31/2012 $ % $ $ % $ % $ $2.12 6/30/2012 $ % $ % $ % 9/30/2012 $ % $ % $ % 12/31/2012 $ % $ % $ % $ % $ % $ % /31/2013 $ % $ $ % $ % $ $2.50 6/30/2013 $ % $ % $ % 9/30/2013 $ % $ % $ % 12/31/2013 $ % $ % $ % $ % $ % $ % /31/2014 $ % $ $ % $ % $ $2.72 6/30/2014 $ % $ % $ % 9/30/2014 $ % $ % $ % 12/31/2014 $ % $ % $ % $ % $ % $ % /31/2015 $ % $ $ % $ % $ $3.04 6/30/2015 $ % $ % $ % 9/30/2015 $ % $ % $ % 12/31/2015 $ % $ % $ % $ % $ % $ % /31/2016 $ % $ $ % $ % $ $3.30 6/30/2016 $ % $ % $ % 9/30/2016 $ % $ % $ % 12/31/2016 $ % $ % $ % $ % $ % $ % /31/2017 $ % $ $ % $ % $ $3.44 6/30/2017 $ % $ % $ % 9/30/2017 $ % $ % $ % 12/31/2017 $ % $ % $ % $ % $ % $ % * Based on the annualized dividend announced the previous quarter 1) Guidance provided at the beginning of each fiscal year and does not reflect mid-year guidance changes. No. of consecutive quarterly dividends paid since 2003: 58 No. of quarterly dividend increases since 2003: 44 No. of consecutive quarterly dividend increases: 22 45

46 Exhibit 3: DRIP/DSPP and Equity Shelf Program (ESP) Activity DRIP and Optional Cash Proceeds Dividend Reinvestment Optional/Initial Purchases/Waiver Total Purchases Date Shares Avg. Price Net Proceeds Shares Avg. Price Net Proceeds Shares Avg. Price Proceeds ,000 $ $ 2,355, ,000 $ $ 23,279, ,000 $ $ 12,803, ,000 $ $ 1,681, ,000 $ $ 1,832, to ,232 $ $ 476,277 56,075 $ $ 620, ,307 $ $ 1,096, to ,376 $ $ 1,429,665 6,288,189 $ $ 91,748,994 6,388,564 $ $ 93,178, ,888 $ $ 842,261 1,636,690 $ $ 26,465,921 1,691,578 $ $ 27,308, ,110 $ $ 933,356 2,913,613 $ $ 59,605,405 2,960,723 $ $ 60,538, ,944 $ $ 12,680,187 2,164,804 $ $ 46,588,707 2,852,748 $ $ 59,268, ,082 $ $ 17,487,618 4,262,944 $ $ 94,453,583 5,062,026 $ $ 111,941, ,917 $ $ 24,577,834 1,128,490 $ $ 31,294,119 1,930,407 $ $ 55,871, ,354 $ $ 16,059,177 1,617,145 $ $ 55,442,759 2,083,499 $ $ 71,501, ,187 $ $ 25,634,519 3,461,644 $ $ 125,236,640 4,183,831 $ $ 150,871, ,438,336 $ $ 44,429,942 5,776,939 $ $ 195,611,433 7,215,275 $ $ 240,041,375 Jan-17 - $ - $ - 6,571 $ $ 215,860 6,571 $ $ 215,860 Feb ,413 $ $ 6,616,308 7,606 $ $ 234, ,019 $ $ 6,851,192 Mar-17 - $ - $ - 8,565 $ $ 268,208 8,565 $ $ 268,208 Apr-17 - $ - $ - 8,036 $ $ 277,014 8,036 $ $ 277,014 May ,614 $ $ 11,568,649 7,298 $ $ 243, ,912 $ $ 11,811,882 Jun-17 - $ - $ - 9,130 $ $ 296,867 9,130 $ $ 296,867 Jul-17 - $ - $ - 9,234 $ $ 310,743 9,234 $ $ 310,743 Aug ,324 $ $ 9,532,434 9,453 $ $ 288, ,777 $ $ 9,821,091 Sep-17 - $ - $ - 8,664 $ $ 283,153 8,664 $ $ 283,153 Oct-17 - $ - $ - 8,383 $ $ 265,758 8,383 $ $ 265,758 Nov ,204 $ $ 5,735,704 12,247 $ $ 334, ,451 $ $ 6,070,074 Dec-17 - $ - $ - 8,865 $ $ 250,027 8,865 $ $ 250,027 Total DRIP / DSPP: 37,353,566 $ $ 950,290,982 46

47 Exhibit 3: DRIP/DSPP and Equity Shelf Program (ESP) Activity (cont d) ATM/ESP Program Program Settlement Year / Month Total Shares Average Price (Net) Gross Proceeds 1) $100MM ,412,835 $17.16 $ 24,250, ,786,565 $ ,699,809 Program #1 Total 5,199,400 $19.22 $ 99,950,620 2) $140MM ,078,808 $21.67 $ 66,712, ,419,149 $ ,093, ,719 $ ,135,656 Program #2 Total 5,256,676 $21.87 $ 114,942,079 3) $245MM ,639,643 $24.10 $ 63,613, ,766 $ ,827,048 Program #3 Total 3,623,409 $25.24 $ 91,440,548 4) $250MM ,520,047 $30.87 $ 170,392, ,848,170 $ ,451,652 Program #4 Total 7,368,217 $31.74 $ 233,844,499 5) $500MM ,635 $31.10 $ 20,392, ,853 $32.14 $ 23,074,336 Program #5 Total 1,373,488 $31.65 $ 43,466,400 ATM/ESP Grand Totals 22,821,190 $23.67 $ 540,177,746 47