Omega Healthcare Investors (OHI) 8 May 192019 Q1 Earnings call transcript

Good day, and welcome to the Omega Healthcare Investors First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Michele Reber. ahead. go Please

or Marshall. historical good Taylor are and Chief me These acquisitions, are Operations, our projections, Form transitions results results such identifies and prospects may financial cause statements. may today outlook XX-K, that be our Development may policy, this and our Securities in Thank events those CFO, see business or morning. of condition Bob the dispositions or portfolio factors restructurings, which our conference our and as not actual CEO, Exchange Jeff releases SVP press forward-looking regarding and and contemplated Commission, uncertainties statements forward-looking on Pickett; without Steven portfolio Booth; made specific call Stephenson; Omega’s actual including facts during generally. that with Officer, you, to financial cause Please operators, filings differ Insoft; risks our statements materially. With forward-looking limitation described Comments materially dividend COO, Corporate to and differ from involve statements, which report rent Dan payments, most recent

at our to issued now FFO non-GAAP will the and adjusted press today, to call website of financial of such and Generally of measures Accepted the some FFO, well an usefulness will www.omegahealthcare.com, the the as measures as to FAD over I section we case the these are turn explanation EBITDA. the adjusted comparable non-GAAP release. FFO, under recently FFO non-GAAP information in available of our in measure and under During as Reconciliations measures call most Taylor. of refer the Accounting Principles financial

and in call. and quarter skilled XXXX joining earnings nursing industry status results and general. the Good facility comment Michele. earnings discuss of will guidance, on I first our conference I thank morning, Thanks, quarter will MedEquities the our Today, acquisition our for first you XXXX

is the and repositioning return share a is activity. of XXXX $X.XX We of restructuring per fourth declared $X.XX of $X.XX adjusted expected quarter more of XX% Payout than $X.XX of asset share. adjusted more post Our reflects FAD. ratio per dividend. our FFO beginning share XX% a XXXX’s and was adjusted FFO per improvement FFO environment our and predictable again to This

As have these XXXX. expect the throughout continue ratios strengthen in we indicated past, that we to payout will

adjusted full-year with guidance remains guidance XXXX $X Our share FFO unchanged $X.XX share. $X.XX to and fourth $X.XX to of per per quarter guidance of

have we’ll The we near-term We will guidance skilled optimistic and second quarter the there remains X.X% but be is notwithstanding October, long-term, acquisition challenged, PDPM XXXX the revisit implementation with starting Daybreak challenges in nursing in results. rate to and expense after continue Medicare smaller facility MRT relief our believe combined upside industry operators. increase some close on welcome opportunities. facing savings over and of and certain we the current the Proposed reimbursement, provide

In the census addition, I fourth occupancy continues turn XX.X%. to to will now quarter Bob. stable with call remain of over our

and morning. Taylor, Thanks, good

share per per on a was the or as of basis Our $XXX $X.XX the quarter or to for $X.XX million, $XXX reportable first FFO XXXX. dilutive in quarter, million, compared share

transitioned receipts important resulted January the X, of uncollectible tenant a to offset operating another. of our our to press release, one the corresponding $XXX transitions outlined our for versus related million new over taxes had and in partially primarily to be reconciliation accounting revenue, cash website. instead revenue $X.XX as Our share found operators or offset quarter adjusted ground was excludes of quarter Aviv in the the provision approximately basis, lease quarter real was reserve million adopted liability and income new loans million income. several was P&L FFO estate was related standard transfer Timing provision $XXX longer to to asset the increase revenue writing the off and XXXX, a non-cash to for the accounts $X.X tenant quarter to occurred Operating with on to and therefore, of of throughout $X increase made one-time write-off a a existing of this recording net during off $XXX incremental booked period. amendments the standard the million related paid million first lease new requires items million, adjusted straight-line XXXX. to that XXXX, our $XXX,XXX time lease the $XX.X revenue that reduction made of per from expenses that as $XXX first renovations the revenue. during as a for both recorded for well a quarter capital in XXXX. we The to million sales, effective a the $XXX revenue to and combination XXXX, facilities And related to a revenue of in and receivables in accounting straight-line approximately reduced revenue related the were which from tenant It’s of by same resulting lastly, lease of assets fourth result to supplemental The from since Omega for minimal operators of recorded as Revenue note was Please and million revenue investments on of impact. of of receivable. quarter Orianna merger third completed FFO facilities that quarters non-cash includes for no a The was note uncollectible needed.

finalization quarter quarter first the of severance positions. financing was first non-cash of the Interest in excluding closing million elimination approximately same as a charges million million debt, Omega to rates. held million LIBOR to for collectability related based including quarter, $X.X lower of of cost recorded or for XXXX, first receivable higher the the Orianna Our portfolio of the the offset a the estate XXXX trust. the debt by balances the leases the cost, in $X financing to the remaining restructuring direct was were impairment higher G&A of when the certain expense owed on result Chicago estimated of deferred from quarter and primarily our office, as of expense accounts We $XX.X $XX included of blended resulting on as related in

for approximately payoff mid-May. and in facility For common shares assume MRT on approximately to the MedEquities, $XXX we for million their completed MedEquities, paying each major XXXX and X.X existing common plan will additional of purposes, issue On credit schedule million per will related We share. our quarter should share We be Omega on the following construction modeling assuming and assumptions. guidance cash in charges. per assume to projects take the information website. debt quarter. are be be project Page XXXX we of $X new We in the put G&A between X for supplemental second on accordance first our of for million We $XX assume restructuring revenue our consistent normalizing with to with into our posted service our of acquisition non-cash be million $XX quarter quarterly when

credit our yields. XX, by between to variability expense facility of per our in at will and million more XXXX. interest per rate we decrease, $XX potential estimated in continue driven million expenses and borrowings traditional of XXXX. second-half starting approximately expense to X.X% million is legal floating XX% At the in asset Non-cash or was assume $XXX X% our LIBOR on quarter a primarily cash debt. $X be expense, $X stock-based the rates. proceeds quarter compensation March disposition to at opportunities return As debt, We will from is million redeployed Interest

share Regarding issuances.

addition million quarter we we’ll and our the plan with of be our equity per million common In historical through dividend for be reinvestment issued $XX million assume approximately stock issuances. shares issuing $XX to to common X.X purchase to consistent MedEquities,

equity or market our under on issue and based a decide common continue we of our $XXX in common issued and fund In ATM dividend ATM million conditions, purchase quarter acquisitions. to subject our X.X the stock, of stock proceeds equity our first and sold and Omega of approximately delever stock we through may price reinvestment to combination Lastly, shares generating plans. to potential to million gross XXXX,

will adjusting for and construction roughly Dan new times. operational leverage pro on QX builds, call our the I’ll cash the XX known turn March is Booth. debt the It’s process times. to sheet to fixed new the related When important annualized revenue our in months. calculations X.X funded Daybreak, be related EBITDA and would our remains EBITDA X.X XX, At debt revenue ratio no our X.X net XX% to adjusted these of Our and billion on to now shortfall $X.X builds, eight times was fixed next and was the approximately forma to coverage over in which strong. our note, balance charge has be

morning, Thanks, everyone. Bob, and good

of an with These operator for during and EBITDARM X.XX September had trailing XXX As times, portfolio and at X.XX and for the asset quarter and of approximately EBITDAR and XXXX X.XX core ended Omega fourth March respectively, spread located Trailing third-party coverage XX XX-month facilities remained were operating XX-month Kingdom. operators the X.XX across the XXXX. portfolio XX, our states times, stable XX, versus of period respectively, within XX,XXX XX United beds. XXXX, operating facilities,

to matters. portfolio Turning

in system and Texas XX previously, Medicaid top as discussed a in issues has pressure and liquidity operators. challenges a operators have continued result labor our are not The with low unique As reimbursement Daybreak placed Texas struggle Texas. all one on Daybreak, reimbursement challenges continued to of of to very

XX relief contractual of rate amendment forbearance the quarters Texas the from the the forbearance Texas earnings we on rate slated rate rent surrounding has second agreement whereby of amendment the of affairs and will point, XXXX. settlement call, free required. benefits further increase, reported XX, in or outcome any Omega agreement benefit that Daybreak in Omega are facilities under into including Daybreak confident are as remains uncertainties Medicare of we be program, PDPM all the to will their ultimate the implementation and date, a October entered To this relief addition our become Daybreak our into Daybreak it Texas, whether factors, X, XXXX. uncertain extension this January the $X.X two effective and agreement. to effective fourth million obligations X.X% a QIPP in known several on given each a Notwithstanding of XXXX, At of to As deferral the granted quarter of and first state met

Turning to investments. new

portfolio MedEquities From their existing an mentioned perspective, needs, involves the Taylor, we’re by for understand identifying effort As respective merger. in better MedEquities diverse and asset capital this integrating classes. business preparing an identify their upcoming our with in opportunities and to other management meeting systems, operational operators

hospitals, group diverse As a behavioral which not of XX medical and This all represent now across Omega the seven provide states nursing and rehab acute over LTACs, of the living a spread but turn relationships assets I diversified portfolio just office represents portfolio building. Jeff. high-quality facility MedEquities addition also reminder, XX operators an will a will hospitals, to facilities Omega acquiring call providers, skilled nearly will meaningful of for new of and be opportunities. growth care the with believe operators, assisted Omega. We

portfolio. Thanks, to of significant Systems, methodology issued three the Prospective new included Dan, million or be SNF the Medicare proposed the revision rate X.X% an or confirmation other its used patient-driven and PPS XX, and provide in rates; X.X%. volume core post that a favorably care with X, a keep compares and will net and reduced to from group of model, Payment on escalation value-based the in which operators calendar align The October the mandated the therapy Medicare annual CMS October operating increase patients to payment the changes X, that PDPM to the April SNF inflationary value time; allows patient A patient of acute of two, good in funding of Medicaid in work everyone. productivity purchasing provided XXXX within rate existing Part year This increase sector One, increase X.X% will adjustment to results the services X.X% increases basket the with expenses net over rate treatment sites. for of effective morning, elements a On payment from X.X% at in X.X% with increase and payment emphasizes PDPM, net definition discount to and SNF focus XXXX. three, XXXX, PPS market characteristics payment provided. of $XXX for pace replace therapy multi-factor that increase Medicare additional Omega’s that rule, clinical ran by minutes coupled outcomes

patients patients to has neutral impact opportunities that adversely involving optimism services now therapy of PDPM to matching flexibility a The disease for involving to to up definition broader anywhere of for has intended our engage cost without yield budget to cautious will revision concurrent or efficiencies, inpatient be six treatments, operators therapy for to policy in for by the to patients used therapy for the Although for which CMS currently outcomes. XX% provision affecting cohort Medicare cost of patients of this a two efficiencies program, group the create margins operating change and protocols best patient four to the admit in the provides positively total been facilities. from group therapy rehabilitation definition from opportunity therapists enhanced

to enhancements significant and ago XXXX, already that call expertise notice that to October build operators Steven. though a the other will now training problems certainly have retooling clinical over I original a smooth technology efforts on necessary protocol CMS’s would X, with time. transition year begun Finally, not on PDPM We a implemented and as be the turn do will result, facilitate expect transitional date. PDPM over simulation,

Thanks, we Avenue, work continue scheduled XXrd Jeff, today. care to on everyone Street, rent memory our accrued line growing as investments In is million, joining high early at and to $XXX for to the XXXX. Senior with at first anchored York billion City in the project in sheet, Maplewood CIP Including open and best-in-class Senior Care the properties, land Manhattan. of and end rise conjunction Maplewood on Homes expected New Omega The Gold on in approximately Second by cost with Senior our is Living, ALF, their including portfolio our well Healthcare and of relationship Living totaled UK. our $X.X as balance project, of Housing the quarter, the thanks

Our of its not but senior REITs. U.S. memory also amongst represents overall living, comprises portfolio the XXX only portfolios housing standalone senior obligations care assets covers basis, and core independent the healthcare larger in UK. assisted living one at On a housing investment the listed lease times, and publicly X.XX now the

quarter projects, this will of and ongoing construction component predicated to Manhattan. related budget Our facilities capabilities our million important CapEx $XX.X of the grow is our tenants $XXX program. remaining $XX.X the expertise. comments. in reinvestment. portfolio, million investment capability, million, Maplewood of predominately XX related some turn to total we pipeline Taylor commitment approximately investment the Through first with ability to strategic to successfully our and is of related final to $X.X portfolio The inclusive new active this continue same of our on operating call having I by design million the our construction was with highlighted coupling invested over is in construction now in-house a for this our to reinvestment in

closing sourcing to in acquisition and forward look We Steven. opportunities the Thanks, new XXXX. MRT growth

results. And demographic We’re questions. optimistic about improving tenant to I’ll open up and reimbursement the the for with environment opportunity and that,

question with Raymond Please from Instructions] begin comes the session. Jonathan We Our ahead. James. go first [Operator now will question-and-answer Hughes

Hey, morning. good

color pick for beginning that give the deals just You up, us you in asset pipeline some the can and size mix on mentioned is pipeline? the to

fair closing, to that Sure. cap seen of folks on and some shows Well, our cheaper for probably we’ve bit nursing it usually a up bit I’d question that a pipeline borrow facility just but obviously, we reported. say the of assets, ability amount the rates. would attribute I and Principally, X.X% the where activity is south moving little little that, tightened XX-year of MRT to to follow-up skilled rates, have a that

but rates, tighter. we little X, I a it’s they’re still So bit cap think, about think at

the answers question. hopefully, So that

couple does. the pipe, to just $XXX of of it million million mean, hundred I a $XXX the size million? then or maybe And Yes,

It’s really lumpy.

always to for activity, million, it we a year So opportunity deal have it’s a But us hard still a modeling $X being – about out. think I about MRT year. of think, we for I talk good the good $XXX billion

not since fully. that could portfolio? of be I comment MedEquities, big progressing about creative you transition, pretty a And is But realize January talk to solutions X how you on maybe Okay, component on then got may the it. able that’s

there’s specific transition of is a going the there the around And mean, I portfolio to entire hopefully a by next was obviously, of creative, than that obviously there reset, lot But really there’s Yes. creative. I Obviously, other when transitioned to that on. you with end if other work over else the portfolio tenant. previous nothing there’s it rent will, to nothing did MRT going than going but nothing week. on

I I you was I that, asking coverage, but guess, can so maybe understand? more for share if

performing to reset we – was had they’re at and relatively date, ample it that the Yes, think rent level. coverage

just one see a answer. or be budget might tough is PDPM I one break-even. in Okay. there upside are then since those at projections a I ultimately most really just news I’m the least fall ever neutral revenues for projections And is positive But PDPM hear be downside this here the trying know But It short? in opportunity? to and operators sounds more, to the I about like are to to chance you guys supposed understand would that same camp. is

Yes.

comes I the so cross the new, think about system it out walks cross or always and to neutral. from the revenue walks have people many at done old –

think, industry much this industry the the very in PDPM. from the unlikely just plan. first CMS I’ve downside we it’s between revenue a it’s on crafting see was spent spent to And where side, ever time So time be I that so clear, in and

surprises. don’t just any see So I

off. I’ll offline, for but the Okay. All that’s Maybe I’ll right. time. me. follow-up Thanks for it jump

you. Thank

comes question Please with go ahead. Our Karin MUFG next from Securities. Ford

say, you allowance? an Texas were, of us what’s call? you and seeing the morning. the overall portfolio? status good trend you’re facility on today our reinvestment on And your Can feeling update worse coverage Texas the better on hi, in Are give properties in the nursing on Daybreak in you than Daybreak Oh, or last

lot mean, things start with that spoke about Well, feel there a I Daybreak. positive we’re how we of in seeing talking are I’ll I my that points. about something

into ones XX One facilities they’re of adding additional that, mega QIPP Texas the program. big is the

bigger see have in October talked X.X%, they that expect get quite expect sometime. in neutral, than is PDPM, Medicare in also hope the hit a very pickup quarter we’re we of the their we’ve XXXX. big then revenue watermark a been into about slowly hoping in to seen and but And that’s at reduction could we It a on stabilize, pickup least would Q Daybreak’s we So and we that low trend we revenues. X, We’ve seen about favorable also up third expenses. which increase seen which positive. of that rate a mix. a of sort in We’ve first it so that, pick further up or quarter some

runs as of through rate far early session. in hopeful is As much relief, and The it’s they’re able that the pretty Texas legislation call. we’re It too obtain to still to still end May takes, some rate rate Texas get in relief. What around know, working operators. the know to but try some our they’re to form relief it clock the for State do of we not I ultimately

And Texas then other operators.

Other a states. Texas fortunately lot them of are in other operators,

stable, in to subsidizing – their So just are not The their a of X, below group. that it’s is Texas above the operations. as it’s so actually some but X mean, but overall, operations the coverages of are it’s states

on of give think rent to do you’ll lot third the Got you October, Daybreak? benefits a for need coming additional quarter those in it. With relief

I – again, shakes happens want come it’s the to prospect in see not to want at second this call. what rate also don’t it’s it’s October, things mix but out until see a long-term situation. quarter. mean, these it’s think I situation, It’s it’s – into in play it’s cash just a the – the Texas too to Q because with relief. point, I once how I but – early

road. tomorrow We solves to down something see want look we’re and the at and you come quarter the that the both to what’s sort do not next don’t going down of mean, the to weigh going have – to coming future I look to for and what do.

And have take, think, in get we we to to as into of as I much have those just can. both account. we order that, do So information things to

about are on And like new and commitment back it. Manhattan the can you just Got It then pre-leasing you rents started a they in Ohio? commencement looks next or pushed rent my the new development. on development how started Have quarter development there. also trending the you have side underwriting, got the question versus is talk

is – leasing concerned, market, Maplewood do what of On in advance part as and and of are very office wanted would early educate their opened strong. office our to – locations, this the far they year as suburban increase sales Manhattan yes, leasing the project with sales in typically the but

year We’re occupancy confident at of the building around XXXX. price in quarter of the talked point and being with see first the starting off this end

performing it just is so about in Ohio? talk can you rent then how side is How on looking it underwriting? far versus – project the And new the

early underwriting. market The consistent suggest as too target terms that to little on that with we’re start early of And we’re would for inquiry will But in be based deposits upon underwriting deposit quantum, the and confident of we absolute bit rents. of tell on far target because did early. total received very leasing the reaction as a level

you. Great. Thank

with Please Scotiabank. Our question Trujillo Trent comes ahead. go from next

the mentioned range. the But the earlier release press comments that thanks taking Bob, and Hi, you questions. issuance for and impact some good could morning, on I equity earlier of FFO here appreciate in guidance this. your

how So maybe trading about thinking you’re stock to quarter this the than you you first hoping, around in about the average? higher talk issued since slightly is could on where I’m right

that our ATM opportunistic very times currently to we’re and in or that. above also our X goal advantage take of We’ve leverage between and pipeline, always help the to been X we’ve fund strong conviction the been

I going think, X times, our more but X.X, So like I’m in get we X to there. to use to always spot the stated and it’s times X goal – sweet

and or ATM merger be at ahead the by we’re day the post it week what So so opportunistic the market. we’ll of MRT day take looking in

this quick a topic. on just Maybe follow-up Okay.

you the any of acquisitions had just the first that and I think first for time You that’s in little the still capital you Is have portfolios cap they’re haven’t bit, whole years, and where X%. rates the you the in a pipeline they did have even no around of Because and changed acquisition? come multiple the nice activity. available state, reserving in didn’t have MRT SNF though quarter, a a on function

So appreciated? on be that any thoughts would

Yes, it we frankly. really a capital-driven at wasn’t of just decision, cycle that there. look is to It’s the weirdness continue the out everything

a ultimately a fair there’s So, amount fair sitting out amount there there’s and hopefully, actionable. that be

next Okay. one. my other just And my question

just CMS operator you star ratings your declined portfolio, but So star average, referral networks, ratings quality that’s average. not ratings? the that of about just takeaways and can saying on its the updated for in kind could impact on broad five your given that what quality talk shift have on But that

Hey, this to do one? want Jeff, take you

Sure. such certain they Yes, moving a the staffing and really essentially the the facilities the change in of ensure five reflect domain, to on cut the are that categories. goalposts in through star one star percentage wanted by ratings rating of quality CMS points each impacted

rating bundling to of or quality the facilities such don’t and operators rehospitalization they if of existing well stay But as of the in discharge continues levels the involve a they’re also therefore length participants the those a those those changing kind But decline, as are already rates, those as quality third should represent a minor in inspection. of about networks, related community star attributes. six gained staffing staffing CJR, impact. have lost directly because such and metrics functional quality true domains, minor improvement, a any just relationships which are a that where changes CMS as those in star a metrics, long already So the amount of any consideration BPCI star override rating be and maybe would a facilities facilities to maintaining have to of not as and And and referral programs established. as we change

who is a if the below which would minor. of might star, operators went how think, to We I lost really haven’t cross-walk mean our be see would have impacted, three many impact they stars

Great. color. the much. I Thank you very appreciate

question with ahead. Our Stifel. next from go Please Vanacore comes Chad

All right, thanks.

increased quarter? estimate like So this million It looks one for the that increase? rent X.X What’s the the or you $X.X with million from Manhattan the project the is Steven. rationale Maplewood behind in inspire for

Hey, take. Chad, I’ll

ahead, Go Bob.

This multiplying by our doing, Bob. is taking is inception-based it Chad, schedule yield. initial is the All cash that funding

So to going you’ll that estimated more see spend money, up. as quarterly we rent Omega

the of respect to it’s our will amount spent. with on on ramp the I for here’s some full end to that’s investment trying at be direction So day, to the give going just be was the guidance – But in debt. day

So into much how would it generate quarterly EBITDA.

All And close. post then, updating Taylor, you MRT alluded guidance to right.

can expect pretty So of cost transaction? change what the from are just some seems synergies which out maybe clear that of Is there factors the some here factors it you might that quantify you guidance? timing, where are other doing and plots,

going terms we in guidance? with aren’t get you go rather where and in in and mostly to up up bottom Why kind evaluate yes, the comment the otherwise, walking walking of think is, it’s very MRT there the have just of the reason annualize I a acquisition. rate end timing, from the So that of in well. costs But Chad. incremental We’re put your part little the you let’s run of likelihood quarter-by-quarter, MRT are you what the raising $X.XX, the argue what with is be over and than will on we perspective high-end. a we’ll moves quarter full-year that certainly let’s then really G&A low-end obviously and give is of close, good our the see second And

more And one then Fair Bob. right. enough. is question for All

payer in in trending operators? change Any So the from how accounts parts is industry? of your headwinds receivable the speed, given

AR ramping we quarter broken in balance just what leasing sheet, this the haven’t [ph] on out the Chad, our – did past, contractual we together. we’ve and done Yes, we’ve

it’s broken – keep so year you you see normal approved actually easier of to say. last out So it’s you if go we’ll straight-line. trust, back out, broken And And got the we’ve the we contractual quarters, the broke versus it where couple now forward, see, the can going But it’s you can’t improved a quarter-over-quarter-over-quarter. slightly. actually

All Thanks. appreciative right. I it.

Omotayo Our ahead. next comes from go question Okusanya Jefferies. Please with

that Great Yes, rent little everyone. basic good and up tenant Question, X.X of a times, morning, bit has quarter. your the a this quarter. portion that coverage inched below

just was kind kind if talk of you’re And of Just with coverage? going of curious what your in how about kind the status tenants on about we of there? lower general of some rent feeling of kind

Yes.

one obviously. coverage. quarter that way – quarter-over-quarter, tend into flat in we put around the that, to having slightly The it’s feel X right times, just was don’t quarter, them significance, move go different we about. can operator but happen X, does So, again. within various EBITDAR really back and give below we it’s We next remain all does above the good about that’s I [indiscernible], X.XX movement really move the any at X, in percentages really it that this was and slightly see up and the what X it buckets, times, it

Gotcha.

rather been always think, idea very play some And vocal talking about all, then that’s role in of I you guys to this And I we��ve have point of demographic a Okay, probably been fundamentals. happen helpful. sooner at than know later. second that start improving

specifically, saw of if did, any Just you that? circumstances the quarter? what portfolio in And this that if your were you curious around

past. see in the we when in talk the we the stability occupancy really about think this I demographics of

they’re mitigated Although length have out some there. to reductions of still extent, stay

that thing is And a expenses up interesting bit. think lot little for Medicaid of for a one we residents. is length see see the I so than stay it less controllable is, creeping Medicare residents you And Medicaid

seeing we some takes. it’s feel a Medicare on that to quality the that patient less side, about, the shift the all still to right because on much in stay Medicaid of little the reduction dynamics in demographics bit is talking think and Medicare controllable pretty makes about consistent good talk I So advantage, of And days the side much we’re longer-term us then and we’re terms that you now. what of of QX are have in QX, length

positive. should proposal could PDPM a me. you kind Last you net where Gotcha. for indulge me one of the CMS Again, situation if for have be

demographics you skilled about $X more mentioned a seems you of But, positive call, to the little to hope billion. you on bit Taylor, little still outlook the acquisition challenging. a a as still becoming positive, to talked outlook nursing be kind get as see pretty being You

the of still of between wise. just I’m challenging of of you of expressing outlook? I’m still Is kind Medicaid of just kind kind some Where caution? two a areas this kind specifically juxtaposition where some because about you’re that the going stuff on things. curious So seeing the those and curious Texas

those of to around is my of be will point starting And December. lots a the May there in things flow is labor bit things to think, start I the that, by continue commentary good and and cash little good near-term. a generated going fact it’s pressure October are are till

the for labor So a be to the backdrop of out here will mentioned hopefully, in a otherwise battle year kind there get we’ve State half in Texas the it, Texas, that’s continue got operators. and to a reasonably of and Texas you that something we positive,

we months, we’ve the got our we continuing, So, good in short-term six I labor likely rest really dynamics into about as next But think, other feel through. to than the in look of get issue the XXXX the industry.

Thank Great. you.

go comes with Our question ahead. Hartwich Street Green from Please Advisors. next Lukas

guys. Hey, Thanks.

touched this a I’m in of that curious occupancy there up talking but if kind You that that? just that was you’re ticked sequentially. if on And about, something or just has shift drove else was already, Medicare

not on Medicare Not Medicaid it’s do additive, math. because – days it’s steady. you basis a it’s Medicaid, well, shift is – even a the in being all just pretty

look incremental in a QX the coming, very particularly population instance, at for patients. is moving up, good sign. we as occupancy Again, Medicaid So from

a Great. this in do going purchase Daybreak year? of is later if exercise to then sense its option you have terms And MRT,

is that sense that it that, unlikely – going option. the it’s they’re Our to exercise

opportunities redeploy there. As they we there like do cap so discussed in meetings, rate, think in the event the we some and X. we’re are we individual might if the X.X% options proceeds and the prepared those be that past for we But relationship

me. you. it That’s for Thank Great.

you. Thank

comes Daniel go Our next question ahead. One. with from Capital Bernstein Please

at bit assets you and day would particular about value-add prospects you’re point that to whether this kind that in are acquisitions on maybe triple-net consider or seeking how updated would today, to more thoughts you how senior gears you? a thinking right Hey, I switch and wanted little of some the out industry housing for in subsector?

Yes.

around what and business. such and the right get returns. lever a – can’t to our in right point entry senior for our is, think value for we arms there creator us, in it’s into and Maplewood huge Dan, the entry what’s – we support that with housings just you us continue operators We’ll said the I potential look to Maple it’s continue risk-adjusted point our for, relationship, because other is

to thee That move expected said, You their get and and that and at those sort occupancies the it. opportunities. found portfolios and are haven’t that you with are also have given of up below where opportunities, just dynamics value-add really industry normal look any cap in they markets of are at we comfortable looking rates being we

to neutral. the nursing, skilled think the Okay. more about I And made then But switching that PDPM around side. earlier comments has margin revenue some you being been around back more positivity

such of then as you positive their through from into that how in you’re off. some labor, that thinking are that are XXXX the X.X% given progress but translate the is basket might market lot and into And especially hearing a lease know and XXXX, variables Is far what of lease rehab, margins, there view PDPM XXXX? There that’s coverages increase? progress that So we operators? how as suppose? in still your coverage I might I into on

you margins margin from operator expense every pretty totally is think low you range described. improvement entire side portfolio high X.XX the And to as of fair is the a and it’s but our that that coverage of predominantly an question. or wide. that of coverage. just PDPM, and on about operator It as in coverage. runs from range by in take It of the impacts Yes, a midpoint X.XX We’ve goes through a can the basically gone expense on has all operator. obviously And positive the side

I Medicare to of X.X% going at the go the on In offset terms look pressures. – side, on the that frankly, the labor that’s revenue side,

be hesitant through So I go XXXX. to thinking about and coverages ahead that model would in

Thank Okay. That’s you. off. I have. hop all I

you. Thank

[Operator further to for turn like I the queue. there Taylor conference questions Instructions] no Pickett time, are to would question the this remarks. At any back in closing over

everyone, for thanks, our call and Sean, attending today. Thanks,

any stand follow-up ready questions. will with We

today’s The conference you you Thank may attending has now and presentation, concluded. for now disconnect.