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Healthcare Homes

healthcarehomes.co.uk

Stage

Acquired | Acquired

About Healthcare Homes

Provider of care homes for the elderly. The company provides residential care in East Anglia, operating 22 residential and nursing homes with over 800 beds. It now operates 14 domiciliary care branches, delivering over 23,000 hours of care per week.

Headquarters Location

Lodge House Lodge Lane, Langham

Colchester, CO4 5NE,

United Kingdom

44 120 623 3190

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Latest Healthcare Homes News

Omega Reports Fourth Quarter and Full Year 2022 Results

Feb 3, 2023

Continued Operator Portfolio Restructurings HUNT VALLEY, Md.–(BUSINESS WIRE)–Omega Healthcare Investors, Inc. (NYSE: OHI) (the “Company” or “Omega”) announced today its results for the quarter and year ended December 31, 2022. FOURTH QUARTER 2022 AND RECENT HIGHLIGHTS Net income for the quarter of $47 million, or $0.19 per common share, compared to $34 million, or $0.14 per common share, for the same period in 2021. Nareit Funds From Operations (“Nareit FFO”) for the quarter was a loss of ($30) million or ($0.13) per common share, on 243 million weighted-average common shares outstanding, compared to $124 million, or $0.50 per common share, on 247 million weighted-average common shares outstanding, for the same period in 2021. Adjusted Funds From Operations (“Adjusted FFO” or “AFFO”) for the quarter of $177 million or $0.73 per common share, compared to $190 million, or $0.77 per common share, for the same period in 2021. Funds Available for Distribution (“FAD”) for the quarter of $171 million, compared to FAD of $179 million for the same period in 2021. Completed $89 million in real estate acquisitions. Funded $15 million in capital renovation and construction-in-progress projects. Sold 33 facilities for $321 million in cash proceeds and $105 million in seller financing, generating a $180 million gain. Declared a $0.67 per share quarterly cash dividend on common stock to be paid in February. FULL YEAR 2022 HIGHLIGHTS Net income for the year of $439 million, or $1.80 per common share, compared to $428 million, or $1.75 per common share, for the same period in 2021. Nareit FFO for the year of $461 million or $1.89 per common share, on 244 million weighted-average common shares outstanding, compared to $655 million, or $2.68 per common share, on 244 million weighted-average common shares outstanding, for the same period in 2021. AFFO for the year of $730 million or $2.99 per common share, compared to $810 million, or $3.31 per common share, for the same period in 2021. FAD for the year of $678 million, compared to FAD of $768 million for the same period in 2021. Completed $238 million in real estate acquisitions. Invested $96 million in three new loans. Funded $70 million in capital renovation and construction-in-progress projects. Repurchased 5 million common shares for $142 million. Sold 77 facilities for $759 million in cash proceeds and $105 million in seller financing, generating a $360 million gain. Paid a $0.67 per share quarterly cash dividend on common stock in February, May, August and November. Nareit FFO, AFFO and FAD are supplemental non-GAAP financial measures that the Company believes are useful in evaluating the performance of real estate investment trusts (“REITs”). Reconciliations and further information regarding these non-GAAP measures are provided at the end of this press release. CEO COMMENTS Taylor Pickett, Omega’s Chief Executive Officer, stated, “Our fourth quarter financial performance was materially in line with our prior quarter, as we continued to work through operator restructurings. As we previously announced, our first quarter earnings will be further impacted by deferred rents associated with additional operator restructurings. We expect this will result in a decline in our first quarter earnings and a related increase in our dividend payout ratio. Barring additional unforeseen restructurings, we would expect our operating performance to improve as the year progresses and operator restructurings are completed. However, with both facility occupancy and profitability still meaningfully below pre-pandemic levels, the risk of further operator issues remains.” Mr. Pickett continued, “The operating backdrop seems to be slowly improving. Portfolio occupancy continues to grow, albeit modestly, as the labor market gradually improves. Many states have also implemented much needed Medicaid reimbursement rate increases, for which the industry is grateful. However, with inflation still at elevated levels, it is vitally important that federal and state fundings continue to reflect the challenging cost environment facing the industry.” Mr. Pickett concluded, “Still, we remain constructive on our business longer-term. As a low-cost provider of post-acute care, the skilled nursing industry is an integral part of the healthcare continuum and an important tool in the effort to meet increasing clinical needs at a manageable price. We believe the industry is well positioned to benefit from multi-decade demographic tailwinds, and we will continue to work with our operators to help them meet this increased demand.” FOURTH QUARTER 2022 RESULTS Revenues – Revenues for the quarter ended December 31, 2022 totaled $144.8 million, a decrease of $105.1 million over the same period in 2021. The decrease primarily resulted from (i) incremental write-offs of straight-line accounts receivable and lease inducements in 2022 as a result of placing LaVie Care Centers, LLC (“LaVie,” f/k/a Consulate Health Care), Maplewood Senior Living (“Maplewood”) and two other operators on a cash basis for revenue recognition, (ii) asset sales completed throughout 2021 and 2022, (iii) operator restructurings and (iv) no rental income in the fourth quarter of 2022 from Agemo Holdings, LLC (“Agemo”); see “Operator Updates” below. The decrease was partially offset by revenue from new investments completed throughout 2021 and 2022. Expenses – Expenses for the quarter ended December 31, 2022 totaled $280.1 million, an increase of $63.5 million over the same period in 2021. The increase primarily resulted from (i) a $36.3 million increase in acquisition, merger and transition related costs related primarily to the LaVie portfolio restructure, (ii) a $15.0 million increase in impairment on real estate properties, (iii) a $14.6 million increase in the provision for credit losses and (iv) a $2.3 million increase in stock-based compensation expense, partially offset by (i) a $4.2 million decrease in general and administrative (“G&A”) expense primarily related to $2.7 million of severance costs booked in 2021 and (ii) a $1.5 million decrease in depreciation and amortization expense primarily related to facility sales and facilities reclassified as held for sale. Other Income and Expense – Other income for the quarter ended December 31, 2022 totaled $183.2 million, an increase of $182.9 million over the same period in 2021. The increase primarily resulted from a $179.2 million increase in gain on assets sold. Net Income – Net income for the quarter ended December 31, 2022 totaled $46.7 million, an increase of $12.5 million over the same period in 2021. The increase primarily resulted from the aforementioned $182.9 million increase in other income and expense partially offset by (i) the $105.1 million decrease in total revenue, (ii) the $63.5 million increase in expenses and (iii) a $1.8 million decrease in income from unconsolidated joint ventures. 2022 ANNUAL RESULTS Revenues – Revenues for the year ended December 31, 2022 totaled $878.2 million, a decrease of $184.6 million over the same period in 2021. The decrease primarily resulted from (i) incremental straight-line accounts receivable and lease inducement write-offs in 2022 primarily as a result of placing LaVie, Maplewood and seven other operators on a cash basis of revenue recognition, (ii) asset sales completed throughout 2021 and 2022, (iii) operator restructurings and (iv) no rental income or interest income recognized in 2022 from Agemo; see “Operator Updates” below. The decrease was partially offset by revenue from new investments completed throughout 2021 and 2022. Expenses – Expenses for the year ended December 31, 2022 totaled $799.7 million, an increase of $22.7 million over the same period in 2021. The increase primarily resulted from (i) a $40.2 million increase in acquisition, merger and transition related costs related primarily to the LaVie portfolio restructure, (ii) a $5.9 million increase in stock-based compensation expense and (iii) a $3.3 million increase in real estate tax and ground lease expense, partially offset by (i) a $9.6 million decrease in depreciation and amortization expense related to facility sales and facilities reclassified as held for sale, (ii) a $9.1 million decrease in provision for credit losses, (iii) a $6.2 million decrease in impairment on real estate properties and (iv) a $2.0 million decrease in interest expense. Other Income and Expense – Other income for the year ended December 31, 2022 totaled $357.6 million, an increase of $227.3 million over the same period in 2021. The increase primarily resulted from a $198.3 million increase in gain on assets sold. Net Income – Net income for the year ended December 31, 2022 totaled $438.8 million, an increase of $10.5 million over the same period in 2021. The increase primarily resulted from the aforementioned (i) $227.3 million increase in other income and expense partially offset by (i) the $184.6 million decrease in total revenue, (ii) the $22.7 million increase in expenses and (iii) the $8.8 million decrease in income from unconsolidated joint ventures. FINANCING ACTIVITIES $500 Million Stock Repurchase Program – The following is a summary of the 2022 quarterly common share repurchases through December 31: Operator Updates: LaVie – In the fourth quarter of 2022, Omega began the process of restructuring its portfolio with LaVie. On December 30, 2022, the Company sold 11 facilities previously subject to a lease agreement with LaVie to a third party for a sales price of $129.8 million and provided $104.8 million of seller financing bearing interest at 8% with a December 29, 2027 maturity. In connection with the restructuring, Omega agreed to provide LaVie a $35.0 million transition fee in the fourth quarter of 2022 in connection with the sale of these facilities and expected future facility sales; $25.0 million of this fee was assumed and paid by the buyer of the 11 facilities, rather than Omega, as part of the consideration of the transaction. Concurrent with the sale, Omega also amended its lease agreement with LaVie to reduce the contractual rent from $8.3 million to $7.3 million per month and to provide Omega a rent reset if LaVie meets certain financial metrics at any time after February 1, 2027. Omega’s two term loan agreements with LaVie, with $32.5 million in aggregate principal outstanding, were also amended to extend the maturity dates to November 2036, reduce the interest rates to 2%, convert from monthly cash interest payment to payment-in-kind interest and to remove the requirement for principal payments before the maturity date. The restructuring discussions are still ongoing, but the Company anticipates additional restructuring activity related to this operator in 2023. As a result of the restructuring activities during 2022 and future expected restructuring activities, during the fourth quarter of 2022, Omega placed LaVie on a cash basis of revenue recognition, recorded the $24.8 million received for rent in the quarter and wrote off approximately $58.0 million of straight-line rent receivables and lease inducements to rental income. The Company also recorded a $23.3 million provision for credit losses related to LaVie’s term loans in the fourth quarter of 2022. In the first quarter of 2023, the Company agreed to allow LaVie to defer up to 66% of contractual rent from January 2023 through April 2023. Maplewood – In the first quarter of 2023, the Company entered into a restructuring agreement to amend and restate its master lease and loan agreement with Maplewood. As part of the restructuring agreement and amendments, Omega and Maplewood agreed, among other terms, to (i) fix contractual rent at $69.3 million per annum and defer the annual 2.5% escalators through December 31, 2025, (ii) convert the 7% per annum cash interest due on the loan to PIK only interest in 2023 with cash interest payments to be phased in starting in 2024 and (iii) increase the capacity of the loan from $250.5 million to $320.0 million, inclusive of PIK interest. As a result of the negotiations, during the fourth quarter of 2022, the Company placed Maplewood on a cash basis of revenue recognition, recorded the $20.2 million received for rent and interest, and wrote off approximately $29.3 million of straight-line rent receivables and lease inducements to rental income. Agemo – During the fourth quarter of 2022, Agemo continued to not pay its contractual rent and interest due under its lease and loan agreements, and as a result, the Company did not recognize revenue related to this operator. During the fourth quarter of 2022, the Company sold 20 facilities that were previously leased to Agemo for $316 million in net proceeds; bringing the 2022 total Agemo assets sold to 22 facilities for $359 million in net proceeds. In the first quarter of 2023, the Company entered into a restructuring agreement, in which Omega and Agemo agreed, among other terms, to (i) reduce annual base rent and interest to $27.9 million commensurate with the sale of the 22 facilities in 2022 and (ii) defer Agemo’s requirement to pay rent and interest until April 1, 2023. Healthcare Homes – During the fourth quarter of 2022, the Company agreed to allow Healthcare Homes Limited (“Healthcare Homes”), a U.K. based operator representing 2.5% of fourth quarter 2022 annualized contractual rent and mortgage interest, the ability to defer up to £6.7 million of contractual rent from January 2023 through April 2023 with regular payments to resume in May 2023. The deferred rent balance accrues interest monthly at a rate of 8% per annum and must be fully repaid by December 31, 2024. Other Operators – As previously disclosed, an operator representing 2.4% of the Company’s first quarter 2022 annualized contractual rent and interest revenue was placed on a cash basis in the second quarter of 2022 after the operator failed to make full contractual rent payments. In the fourth quarter, the operator continued to under-pay rent and paid only $1.5 million, which was recorded for both adjusted FFO and FAD purposes. In January 2023, the operator paid $0.5 million of the $2.0 million of contractual rent due. Omega expects to finalize the transition of this portfolio during the first quarter of 2023. Also, as previously disclosed, an operator representing 2.2% of the Company’s second quarter 2022 annualized contractual rent and interest revenue was placed on a cash basis in the third quarter of 2022 after Omega allowed the operator to apply a $5.4 million letter of credit towards unpaid contractual rent. In the fourth quarter of 2022, the operator paid $2.3 million in cash rent and the Company applied the remaining $1.5 million using the proceeds from the letter of credit, which are fully exhausted. As the operator is on a cash basis, the Company recognized $3.8 million in revenue, adjusted FFO and FAD for the cash received and the cash collateral applied to rent in the fourth quarter of 2022. This operator paid $0.3 million in contractual rent in January 2023. In the fourth quarter of 2022, the Company transitioned three facilities to an existing operator for an initial annual rent of $1.6 million. On February 1, 2023, the Company transitioned 16 of the remaining 20 facilities previously leased to the 2.2% operator to one new and one existing operator for a combined annual rent of $11.2 million. The remaining four facilities are in negotiations to transition to a new operator in the first quarter of 2023. Other Industry News – On January 30, 2023, it was announced that the COVID-19 Public Health Emergency (“PHE”) will end on May 11, 2023. The PHE provided a number of benefits to the industry that will end with its conclusion. The impact on individual operators will vary, and therefore it is not possible to quantify the financial impact it will have on portfolio coverage. However, we expect this will be a modest but incremental headwind to the financial performance of most of our skilled nursing tenants. New Investments: $89 Million Real Estate Acquisition – On December 1, 2022, the Company acquired one facility in Pennsylvania and six facilities in North Carolina for $88.5 million. Concurrent with the acquisition, the Company amended an existing operator’s master lease to include the seven acquired facilities. The incremental base rent for the additional facilities is $7.9 million per annum and includes annual escalators of 2%. Asset Sales and Impairments: $321 Million in Asset Sales – In the fourth quarter of 2022, the Company sold 33 facilities for $320.8 million in cash and $104.8 million in seller financing, recognizing a gain of $180.2 million. Twenty of these facilities were previously classified as held for sale. The sale of 11 facilities, previously leased to LaVie, and the related $104.8 million seller financing were not recognized for accounting purposes as the sale and related seller financing did not meet the accounting criteria to be recognized as a sale and therefore the assets will remain on the balance sheet and the cash interest payments received on the seller’s note will not be included in revenue, but will be added back for purposes of adjusted FFO and FAD. Impairments and Assets Held for Sale – During the fourth quarter of 2022, the Company recorded a $17.2 million net impairment charge, in connection with the LaVie portfolio restructuring to reduce the net book value of 12 facilities to their estimated fair value. As of December 31, 2022, the Company had two facilities classified as assets held for sale, totaling $9.5 million in net book value. One of the two facilities was sold on January 6, 2023 for $20 million. RECLASSIFICATION Effective for the fourth quarter of 2022, the Company adjusted its presentation of certain financial statement line items on its Consolidated Balance Sheet to better align with similar companies in the healthcare real estate space. Mortgage notes receivable – net has been renamed Real estate loans receivable – net, Other investments – net has been renamed Non-real estate loans receivable – net, and certain loans have been reclassified out of Other Investments – net into Real estate loans receivable – net. Specifically, other real estate loans collateralized by second or third mortgage liens, a leasehold mortgage on, or an assignment of partnership interest in the related properties that were previously presented in Other Investments – net are now presented in Real estate loans receivable – net. See the table below for the prior presentation compared to the current presentation of our real estate (“RE”) and non-RE loans. (3) Represents EBITDARM of our operators, defined as earnings before interest, taxes, depreciation, amortization, Rent costs and management fees for the applicable period, divided by the total Rent payable to the Company by its operators during such period. “Rent” refers to the total monthly contractual rent and mortgage interest due under the Company’s lease and mortgage agreements over the applicable period. (4) Represents EBITDAR of our operators, defined as earnings before interest, taxes, depreciation, amortization, and Rent (as defined in footnote 3) expense for the applicable period, divided by the total Rent payable to the Company by its operators during such period. Assumes a management fee of 4%. BALANCE SHEET AND LIQUIDITY As of December 31, 2022, the Company had $5.3 billion of outstanding indebtedness with a weighted-average annual interest rate of 4.2%. The Company’s indebtedness consisted of an aggregate principal amount of $4.9 billion of senior unsecured notes, a $50.0 million unsecured term loan, $366.6 million of secured debt and $19.2 million of borrowings outstanding under its unsecured revolving credit facility. As of December 31, 2022, total cash and cash equivalents were $297.1 million, and the Company had $1.4 billion of undrawn capacity under its unsecured revolving credit facility. DIVIDENDS On January 26, 2023, the Board of Directors declared a quarterly cash dividend of $0.67 per share, to be paid February 15, 2023, to common stockholders of record as of the close of business on February 6, 2023. ADDITIONAL INFORMATION Additional information regarding the Company can be found in its Fourth Quarter 2022 Financial Supplemental posted in the “Quarterly Supplements” section of Omega’s website. Contacts or

Healthcare Homes Frequently Asked Questions (FAQ)

  • Where is Healthcare Homes's headquarters?

    Healthcare Homes's headquarters is located at Lodge House, Colchester.

  • What is Healthcare Homes's latest funding round?

    Healthcare Homes's latest funding round is Acquired.

  • Who are the investors of Healthcare Homes?

    Investors of Healthcare Homes include Bowmark Capital and August Equity.

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