Healthcare REITs: OHI, CCP

Omega Healthcare Investors Inc

Healthcare, Finance/Real Estate


Presented:11/22/2016
Price:$28.77
Cap:$5.87B
Current Price:$40.63
Cap:$10.48B

Presented

Date11/22/2016
Price$28.77
Market Cap$5.87B
Ent Value$11.98B
P/E Ratio19x
Book Value$19.59
Div Yield0.09%
Shares O/S204.08M
Ave Daily Vol2,336,279
Short Int12.01%

Current

Price$40.63
Market Cap$10.48B
Omega Healthcare Investors, Inc. operates as a real estate investment trust, which invests in the long term healthcare industry with a particular focus on skilled nursing facilities located in the US. The company was founded on March 31, 1992 and is headquartered in Hunt Valley, MD.

Healthcare REITs: Short Skilled Nursing Exposure

Omega Healthcare Investors Inc (OHI) & Care Capital Properties Inc (CCP)

Publicly traded companies mentioned herein: Care Capital Properties Inc (CCP), HCP Inc (HCP), Kindred Healthcare Inc (KND), Omega Healthcare Investors Inc (OHI), Quality Care Properties Inc (QCP), Sabra Health Care REIT Inc (SBRA), Ventas Inc (VTR) 

Highlights

The presenter is short shares of Healthcare REITs that have exposure to the skilled nursing segment of the post-acute care market. Specifically, he thinks the shares of Omega Healthcare (OHI) and Care Capital Properties (CCP) are at risk of seeing meaningful declines over the next 12-24 months. The most common post-acute care settings include long-term care (LTC) hospitals, inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs) and home health care providers/ agencies. The Centers for Medicare and Medicaid (CMS) has been aggressively moving towards bundled/ value-based payment models, and SNFs are an easy target because it’s reasonably clear that they have relatively healthy margins and have had an incentive to keep patients at their facilities for as long as-was possible under a fee-for-service (FFS) model. As overall SNF days decline, pressure will mount on OHI’s and CCP’s tenants (this is already happening), and the result will be lower rent coverage and pressure on rental income. At $23-24, CCP is down 22% year-to-date, and at $28-29 OHI is down ~17%. In both cases, the presenter thinks the risk/ reward favors a continuation of the selling pressure for the foreseeable future.

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