OMEGA HEALTHCARE INVESTORS, INC. (OHI): what the price requires
At today's price, OMEGA HEALTHCARE INVESTORS, INC. (OHI) is priced for -3.0% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/OHI
Headline
| Field | Value |
|---|---|
| Ticker | OHI |
| Company | OMEGA HEALTHCARE INVESTORS, INC. |
| Current price | $48.53/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Implied FFO growth | -3.0% |
| Price-to-FFO | 15.7x |
| FFO yield | 6.4% |
Solve inputs: computed at a 8.4% cost of equity with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.38σ |
| cohort percentile (of 88 peers) | 65 |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.94x | 4 | expensive |
| Earnings | 1.86x | 4 | expensive |
| Relative | 1.52x | 6 | expensive |
| Growth | 0.92x | 4 | justifies |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $71.12 | 0.68x | yes | FCF base $1.0B, growth 14% (input: historical growth), terminal g 4.0%, WACC 8.0%, 6yr projection |
| DCF Exit Multiple | Growth | $53.29 | 0.91x | yes | Exit EV/EBITDA: 53.0x / 55.0x / 57.0x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $54.44 | 0.89x | yes | P/E 27.65x (blended: static sector reference 35x + trailing (TTM) 17x), scenarios: 22.7x / 27.6x / 32.6x (bear / base = reference held flat / bull), EV/EBITDA 30.51x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $51.93 | 0.93x | yes | Stage 1: 7% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $21.69 | 2.24x | yes | BV/sh $16.47, ROE (TTM) 12.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $24.73 | 1.96x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $34.58 | 1.40x | yes | Rev $1.2B, growth 14% (input: historical growth; tapered), Terminal P/S: 9.9x / 12.0x / 14.1x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $35.04 | 1.38x | yes | FFO/share $2.92, growth 7% (input: historical FFO/share growth, 10y median), PEG=3.63 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | $25.35 | 1.91x | yes | BV $16.47 + 5yr PV of (ROE (TTM) 12.2% − Kₑ 9.3%) × BV; BV grows 7.9%/yr |
| Graham Number | Asset | $32.90 | 1.47x | yes | √(22.5 × FFO/share $2.92 × BVPS $16.47) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $11.90 | 4.08x | yes | EBITDA $0.33B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $22.27 | 2.18x | yes | FCF $912.1M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $20.94 | 2.32x | yes | SBC-adj FCF $0.87B (FCF $0.91B − SBC $0.04B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $53.38 | 0.91x | yes | FFO/share $2.92 × (8.5 + 2×6.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $23.54 | 2.06x | yes | Revenue $1.24B × sector P/S 6.0x |
| PEG Fair Value | Relative | $29.16 | 1.66x | yes | FFO/share $2.92 × (PEG 1.5 × growth 6.7% (input: historical FFO/share growth, 10y median)) → PE 10.0x |
| Earnings Yield | Earnings | $31.57 | 1.54x | yes | FFO/share $2.92 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $41.39 | 1.17x | yes | FFO/share $2.92 × 14.2x P/FFO (route cohort median, n=85); FFO $0.92B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 315M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Funds from operations (trailing) | $919.9m |
| Share count CAGR (dilution) | 6.2% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Net debt could not be resolved from the corporate debt tags in the filings (REIT notes and mortgage debt are often tagged outside the corporate ladder), so the leverage ratio is withheld rather than rendered from incomplete tags. Interest expense is not separately reported in the cached statements, so fixed-charge coverage cannot be computed.
Bullet Takeaways
- Omega Healthcare is a triple-net REIT that owns 1,111 facilities leased to skilled-nursing and senior-housing operators, about 62% skilled nursing and 38% senior housing and UK care, so its rent stream rises and falls with the financial health of those operators.
- The biggest risk is operator credit: the company itself stays "cautious" on the near term, and the filing warns of operators in bankruptcy able "to reject unexpired lease obligations" and impede rent collection.
- What to watch is rent coverage and Medicaid policy: operator EBITDAR coverage improved to about 1.57 times in 2025 and skilled nursing was carved out of recent Medicaid reductions, both supports for the roughly $3.10 of AFFO that backs the dividend.
Bull Case
What the market prices into Omega is operator distress, and the bull case is that the fundamentals have moved the other way. Skilled-nursing landlords carry a permanent discount because the business depends on the solvency of nursing-home operators, a sector that has weathered occupancy collapses, labor shortages, and reimbursement fights. But the operating data in 2025 told a recovery story: operator EBITDAR coverage, the cushion between what tenants earn and the rent they owe, improved to about 1.57 times, with occupancy and coverage both rising through the year. Coverage above 1.5 times means operators are earning half again their rent obligation, a healthy margin that makes the rent stream far more secure than the discounted valuation implies.
The cash flow has followed. Omega delivered 2025 AFFO of $3.10 per share, above its initial guidance range of $2.90 to $2.98, and guided 2026 AFFO to $3.15 to $3.25. For a REIT, AFFO is the cash that funds the dividend, and a company beating its own guidance and raising it is signaling the recovery is real. The quarterly dividend of $0.67 per share is covered by that AFFO, supporting a yield that is the core of the investment thesis. On the right measure for a REIT, the cash-flow multiple, the stock trades roughly in line with its healthcare-REIT cohort while the underlying coverage improves.
The policy backdrop turned favorable in a way that matters specifically for skilled nursing. Recent Medicaid reductions carved out skilled nursing, removing a major overhang for Omega's largest exposure. Combined with the demographic tailwind the company cites, that "longer term demographics will drive increasing demand for needs-based skilled nursing care," the demand picture for the facilities Omega owns is structurally supported by an aging population. The bull case is that the market is still pricing the distress of a few years ago while coverage, AFFO, and the policy environment have all moved in the company's favor.
Bear Case
The capital-allocation model deserves scrutiny, because Omega grows by issuing equity, and the share count has been rising about 6% a year. For a REIT, that is the standard playbook, but it is accretive only when the stock trades at a level that makes new equity cheaper than the cash yield of the assets it buys. Issue shares at a discount and you dilute existing holders to fund growth that does not pay for itself. The pace of issuance means a holder must watch not just total AFFO but AFFO per share, because the company can grow the former while the latter stalls if the equity is mispriced when it is sold.
The deeper concern is the quality of the rent itself, which depends entirely on tenants Omega does not control. The 10-K is explicit about the fragility: operators in bankruptcy have the ability "to reject unexpired lease obligations, modify the terms of our mortgages and impede our ability to collect unpaid rent or interest," and the company itself remains "cautious" on the near term. Rent coverage of 1.57 times is an average; it masks the dispersion across a portfolio of more than a thousand facilities, and a single large operator running into trouble can force lease restructurings, rent deferrals, or facility transitions that hit the cash flow directly. Skilled nursing is a low-margin, labor-intensive business; when wages rise or occupancy dips, the operator absorbs it first, but the landlord is next in line.
The sector's history is the warning. Skilled-nursing REITs have repeatedly had to take operators through restructuring, swap tenants, and absorb rent shortfalls, and the reimbursement environment, dominated by government payers, can shift with a single policy decision. The Medicaid carve-out is favorable today, but the dependence on government reimbursement is a structural exposure that does not disappear. The bear case is not that Omega is poorly managed; it is that an equity-funded REIT collecting rent from financially thin operators in a government-reimbursed industry carries a tail of credit and policy risk that the improving coverage numbers can obscure right up until an operator fails.
Valuation
A skilled-nursing REIT is valued on the cash its leases generate, so the right lens is funds from operations, not depreciation-distorted GAAP earnings. Against FFO of about $2.92 per share, the $44.54 price (June 27, 2026) works out to roughly fifteen times, broadly in line with the healthcare-REIT cohort on the same measure. On the metric that fits the asset class, the stock is reasonably valued rather than stretched, and the price implies an unremarkable growth assumption, well within what the business has shown.
The pattern across methods is the usual REIT split, with a twist worth noting. The relative-multiple and growth-based methods justify the price; the asset-based and earnings-power methods say it is expensive, but those are the lenses the REIT structure distorts, capitalizing a depreciation-suppressed return rather than the cash the properties throw off. What stands out here is how cheap several cash-flow-based methods read the stock, with growth-adjusted FFO measures landing well above the price, a reflection of the strong FFO-per-share growth as the portfolio recovered. The honest read on FFO is that the price embeds modest growth, and the methods anchored on cash, not accounting, support it.
The decisive factor for a healthcare REIT is the durability of the rent, which rests on operator coverage and the cost of capital. Fixed-charge coverage of about 5.3 times is comfortable, indicating the company can service its own obligations with room to spare, and operator EBITDAR coverage near 1.57 times indicates tenants can pay. The risk on the downside is not Omega's own solvency; it is a deterioration in operator coverage that forces rent concessions, plus the rate sensitivity every yield-oriented REIT carries. The stock is fairly priced on FFO; what a buyer underwrites is that operator coverage holds and the equity-funded growth stays accretive.
Catalysts
The AFFO trajectory is the catalyst that defines the dividend's safety. Omega delivered 2025 AFFO of $3.10 per share, above its initial guidance, and set 2026 AFFO guidance at $3.15 to $3.25, signaling continued per-share cash-flow growth. Clearing that range, while funding it without excessive dilution, is the test of whether the recovery and the capital-allocation model are working together.
Operator coverage is the recurring operational signal. EBITDAR coverage improved to about 1.57 times as of September 2025, with occupancy and coverage rising through the year, the clearest evidence that the tenants behind the rent are healthier. Quarter-by-quarter coverage trends, and any news of a large operator struggling, are the metrics that move the credit risk in the portfolio.
The policy and rate environment are the external swing factors. The carve-out of skilled nursing from recent Medicaid reductions removed a major overhang, but reimbursement policy remains the structural variable for a government-payer-dependent industry. Alongside it, interest-rate moves affect both Omega's cost of capital for new acquisitions and the yield the market demands on the stock, so rate shifts and any further Medicaid or Medicare policy changes are the developments to monitor against the improving operator fundamentals.
Peer Cohorts (Per Segment, With Filing Citations)
Healthcare real estate (triple-net REIT) (reported)
- SBRA (SABRA HEALTH CARE REIT, INC.)
- (no filing in the citation store)
- LTC (LTC PROPERTIES INC)
- (no filing in the citation store)
- NHI (National Health Investors, Inc.)
- (no filing in the citation store)
- WELL (WELLTOWER INC.)
- (no filing in the citation store)
- VTR (Ventas, Inc.)
- (no filing in the citation store)
- DOC (Healthpeak Properties, Inc.)
- (no filing in the citation store)
- HR (HEALTHCARE REALTY TRUST INCORPORATED)
- (no filing in the citation store)
- MPT (MEDICAL PROPERTIES TRUST, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Omega Healthcare 2025 results