OMEGA HEALTHCARE INVESTORS INC 10-Q

Item 1 - Financial Statements OMEGA HEALTHCARE INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2020 2019 ​ ​ (Unaudited) ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ Real estate properties ​ ​ ​ Real estate investments ​ $ 8,807,944 $ 8,985,994 ​ Less accumulated depreciation ​ ( 1,902,587 ) ( 1,787,425 ) ​ Real estate investments – net ​ 6,905,357 7,198,569 ​ Investments in direct financing leases – net ​ 10,870 11,488 ​ Mortgage notes receivable – net ​ 886,029 773,563 ​ ​ ​ 7,802,256 7,983,620 ​ Other investments – net ​ 434,653 419,228 ​ Investments in unconsolidated joint ventures ​ 195,546 199,884 ​ Assets held for sale – net ​ 70,516 4,922 ​ Total investments ​ 8,502,971 8,607,654 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ 37,022 24,117 ​ Restricted cash ​ 4,543 9,263 ​ Contractual receivables – net ​ 27,579 27,122 ​ Other receivables and lease inducements ​ ​ 403,313 ​ ​ 381,091 ​ Goodwill ​ 643,491 644,415 ​ Other assets ​ 68,665 102,462 ​ Total assets ​ $ 9,687,584 $ 9,796,124 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND EQUITY ​ ​ Revolving line of credit ​ $ 216,434 $ 125,000 ​ Term loans – net ​ 796,349 804,738 ​ Secured borrowings ​ 385,976 389,680 ​ Senior notes and other unsecured borrowings – net ​ 3,826,799 3,816,722 ​ Accrued expenses and other liabilities ​ 284,959 312,040 ​ Deferred income taxes ​ 9,675 11,350 ​ Total liabilities ​ 5,520,192 5,459,530 ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity: ​ ​ ​ Common stock $ .10 par value authorized – 350,000 shares, issued and outstanding – 226,943 shares as of June 30, 2020 and 226,631 as of December 31, 2019 ​ 22,694 ​ 22,663 ​ Common stock – additional paid-in capital ​ 5,999,972 ​ 5,992,733 ​ Cumulative net earnings ​ 2,624,630 ​ 2,463,436 ​ Cumulative dividends paid ​ ( 4,610,828 ) ​ ( 4,303,546 ) ​ Accumulated other comprehensive loss ​ ( 66,235 ) ​ ( 39,858 ) ​ Total stockholders’ equity ​ 3,970,233 ​ 4,135,428 ​ Noncontrolling interest ​ 197,159 ​ 201,166 ​ Total equity ​ 4,167,392 ​ 4,336,594 ​ Total liabilities and equity ​ $ 9,687,584 $ 9,796,124 ​ See notes to consolidated financial statements . ​ 2 Table of Contents OMEGA HEALTHCARE INVESTORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Six Months Ended ​ June 30, ​ June 30, ​ ​ 2020 2019 ​ 2020 2019 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental income ​ $ 221,532 ​ $ 194,817 ​ $ 443,032 ​ $ 386,994 ​ Income from direct financing leases ​ 259 ​ 259 ​ 517 ​ 519 ​ Mortgage interest income ​ 21,680 ​ 18,832 ​ 41,365 ​ 36,966 ​ Other investment income ​ 10,932 ​ 11,133 ​ 21,584 ​ 23,047 ​ Miscellaneous income ​ 1,992 ​ 238 ​ 2,921 ​ 1,441 ​ Total operating revenues ​ 256,395 ​ 225,279 ​ 509,419 ​ 448,967 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses ​ ​ ​ ​ ​ Depreciation and amortization ​ 83,586 ​ 73,637 ​ 166,229 ​ 144,489 ​ General and administrative ​ 13,969 ​ 13,875 ​ 29,892 ​ 30,008 ​ Real estate taxes ​ ​ 3,655 ​ ​ 4,030 ​ ​ ​ 7,321 ​ ​ 7,912 ​ Acquisition and merger related costs ​ 251 ​ 1,236 ​ 26 ​ 4,185 ​ Impairment on real estate properties ​ 11,988 ​ 5,709 ​ 15,627 ​ 5,709 ​ (Recovery) impairment on direct financing leases ​ ( 752 ) ​ — ​ ( 752 ) ​ 7,700 ​ Provision for credit losses ​ 15 ​ — ​ 1,501 ​ — ​ Total operating expenses ​ 112,712 ​ 98,487 ​ 219,844 ​ 200,003 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other operating income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) on assets sold – net ​ ​ 12,843 ​ ​ ( 267 ) ​ ​ ​ 14,681 ​ ​ ( 264 ) ​ Operating income ​ 156,526 ​ 126,525 ​ 304,256 ​ 248,700 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ Interest income and other – net ​ 141 ​ ( 191 ) ​ ( 593 ) ​ 146 ​ Interest expense ​ ( 52,791 ) ​ ( 48,380 ) ​ ( 105,532 ) ​ ( 96,480 ) ​ Interest – amortization of deferred financing costs ​ ( 2,461 ) ​ ( 2,238 ) ​ ( 4,922 ) ​ ( 4,476 ) ​ Realized gain (loss) on foreign exchange ​ 1 ​ ( 195 ) ​ ( 69 ) ​ ( 169 ) ​ Total other expense ​ ( 55,110 ) ​ ( 51,004 ) ​ ( 111,116 ) ​ ( 100,979 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income tax expense and income from unconsolidated joint ventures ​ 101,416 ​ 75,521 ​ 193,140 ​ 147,721 ​ Income tax expense ​ ( 858 ) ​ ( 793 ) ​ ( 1,863 ) ​ ( 1,468 ) ​ Income from unconsolidated joint ventures ​ 1,402 ​ 943 ​ 2,962 ​ 1,600 ​ Net income ​ 101,960 ​ 75,671 ​ 194,239 ​ 147,853 ​ Net income attributable to noncontrolling interest ​ ( 2,653 ) ​ ( 2,530 ) ​ ( 5,017 ) ​ ( 5,010 ) ​ Net income available to common stockholders ​ $ 99,307 ​ $ 73,141 ​ $ 189,222 ​ $ 142,843 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per common share/unit available to common stockholders: ​ ​ ​ ​ ​ Basic: ​ ​ ​ ​ ​ ​ Net income available to common stockholders ​ $ 0.44 ​ $ 0.35 ​ $ 0.83 ​ $ 0.69 ​ Diluted: ​ ​ ​ ​ ​ Net income ​ $ 0.43 ​ $ 0.34 ​ $ 0.83 ​ $ 0.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average shares outstanding, basic ​ 227,411 ​ 211,569 ​ 227,336 ​ 208,064 ​ Weighted-average shares outstanding, diluted ​ 234,523 ​ 220,479 ​ 234,515 ​ 217,002 ​ See notes to consolidated financial statements . ​ 3 Table of Contents OMEGA HEALTHCARE INVESTORS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Six Months Ended ​ ​ ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 Net income ​ $ 101,960 ​ $ 75,671 ​ $ 194,239 ​ $ 147,853 ​ Other comprehensive (loss) income: ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ( 972 ) ​ ( 5,766 ) ​ ( 19,743 ) ​ ( 1,291 ) ​ Cash flow hedges ​ 513 ​ ( 5,384 ) ​ ( 7,331 ) ​ ( 8,087 ) ​ Total other comprehensive (loss) income ​ ( 459 ) ​ ( 11,150 ) ​ ( 27,074 ) ​ ( 9,378 ) ​ Comprehensive income ​ 101,501 ​ 64,521 ​ 167,165 ​ 138,475 ​ Comprehensive income attributable to noncontrolling interest ​ ( 2,641 ) ​ ( 2,158 ) ​ ( 4,320 ) ​ ( 4,699 ) ​ Comprehensive income attributable to common stockholders ​ $ 98,860 ​ $ 62,363 ​ $ 162,845 ​ $ 133,776 ​ ​ See notes to consolidated financial statements. ​ ​ 4 Table of Contents OMEGA HEALTHCARE INVESTORS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Three Months Ended June 30, 2020 and 2019 Unaudited (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common ​ Additional ​ Cumulative ​ ​ ​ Other ​ Total ​ ​ ​ ​ ​ ​ Stock ​ Paid-in ​ Net ​ Cumulative ​ Comprehensive ​ Stockholders’ ​ Noncontrolling ​ Total ​ Par Value Capital Earnings Dividends Paid Loss Equity Interest Equity Balance at March 31, 2020 ​ $ 22,686 ​ $ 5,997,561 ​ $ 2,525,323 ​ $ ( 4,458,207 ) ​ $ ( 65,788 ) ​ $ 4,021,575 ​ $ 197,070 ​ $ 4,218,645 Grant of restricted stock to company directors ​ ​ 1 ​ ​ ( 1 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ ​ — ​ ​ 4,623 ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,623 ​ ​ — ​ ​ 4,623 Vesting/exercising of equity compensation plan, net of tax withholdings ​ ​ 4 ​ ​ ( 224 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 220 ) ​ ​ — ​ ​ ( 220 ) Deferred compensation directors ​ ​ — ​ ​ 59 ​ ​ — ​ ​ — ​ ​ — ​ ​ 59 ​ ​ — ​ ​ 59 Equity Program ​ ​ — ​ ​ ( 34 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 34 ) ​ ​ — ​ ​ ( 34 ) Vesting/exercising of Omega OP Units ​ ​ — ​ ​ ( 2,825 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,825 ) ​ ​ 2,825 ​ ​ — Common dividends declared ($ 0.67 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 152,621 ) ​ ​ — ​ ​ ( 152,621 ) ​ ​ — ​ ​ ( 152,621 ) Conversion and redemption of Omega OP Units to common stock ​ ​ 3 ​ ​ 813 ​ ​ — ​ ​ — ​ ​ — ​ ​ 816 ​ ​ ( 816 ) ​ ​ — Omega OP Units distributions ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 4,561 ) ​ ​ ( 4,561 ) Comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 947 ) ​ ​ ( 947 ) ​ ​ ( 25 ) ​ ​ ( 972 ) Cash flow hedges ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 500 ​ ​ 500 ​ ​ 13 ​ ​ 513 Net income ​ ​ — ​ ​ — ​ ​ 99,307 ​ ​ — ​ ​ — ​ ​ 99,307 ​ ​ 2,653 ​ ​ 101,960 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101,501 Balance at June 30, 2020 ​ $ 22,694 ​ $ 5,999,972 ​ $ 2,624,630 ​ $ ( 4,610,828 ) ​ $ ( 66,235 ) ​ $ 3,970,233 ​ $ 197,159 ​ $ 4,167,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at March 31, 2019 ​ $ 20,700 ​ $ 5,240,714 ​ $ 2,200,213 ​ $ ( 3,875,884 ) ​ $ ( 39,941 ) ​ $ 3,545,802 ​ $ 259,840 ​ $ 3,805,642 Cumulative effect of accounting change ​ ​ — ​ ​ — ​ ​ ( 8,198 ) ​ ​ — ​ ​ — ​ ​ ( 8,198 ) ​ ​ ( 292 ) ​ ​ ( 8,490 ) Balance at April 1, 2019 ​ ​ 20,700 ​ ​ 5,240,714 ​ ​ 2,192,015 ​ ​ ( 3,875,884 ) ​ ​ ( 39,941 ) ​ ​ 3,537,604 ​ ​ 259,548 ​ ​ 3,797,152 Grant of restricted stock to company directors ​ ​ 2 ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ ​ — ​ ​ 4,040 ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,040 ​ ​ — ​ ​ 4,040 Vesting/exercising of equity compensation plan, net of tax withholdings ​ ​ 2 ​ ​ ( 680 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 678 ) ​ ​ — ​ ​ ( 678 ) Dividend reinvestment and stock purchase plan ​ ​ 59 ​ ​ 21,759 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,818 ​ ​ — ​ ​ 21,818 Deferred compensation directors ​ ​ — ​ ​ 55 ​ ​ — ​ ​ — ​ ​ — ​ ​ 55 ​ ​ — ​ ​ 55 Equity Shelf Program ​ ​ 73 ​ ​ 26,249 ​ ​ — ​ ​ — ​ ​ — ​ ​ 26,322 ​ ​ — ​ ​ 26,322 Issuance of common stock - merger related ​ ​ 748 ​ ​ 280,880 ​ ​ — ​ ​ — ​ ​ — ​ ​ 281,628 ​ ​ — ​ ​ 281,628 Vesting/exercising of Omega OP Units ​ ​ — ​ ​ ( 2,102 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,102 ) ​ ​ 2,102 ​ ​ — Common dividends declared ($ 0.66 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 137,232 ) ​ ​ — ​ ​ ( 137,232 ) ​ ​ — ​ ​ ( 137,232 ) Conversion and redemption of Omega OP Units to common stock ​ ​ 24 ​ ​ 9,129 ​ ​ — ​ ​ — ​ ​ — ​ ​ 9,153 ​ ​ ( 9,153 ) ​ ​ — Omega OP Units distributions ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 5,120 ) ​ ​ ( 5,120 ) Comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 5,573 ) ​ ​ ( 5,573 ) ​ ​ ( 193 ) ​ ​ ( 5,766 ) Cash flow hedges ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 5,205 ) ​ ​ ( 5,205 ) ​ ​ ( 179 ) ​ ​ ( 5,384 ) Net income ​ ​ — ​ ​ — ​ ​ 73,141 ​ ​ — ​ ​ — ​ ​ 73,141 ​ ​ 2,530 ​ ​ 75,671 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 64,521 Balance at June 30, 2019 ​ $ 21,608 ​ $ 5,580,042 ​ $ 2,265,156 ​ $ ( 4,013,116 ) ​ $ ( 50,719 ) ​ $ 3,802,971 ​ $ 249,535 ​ $ 4,052,506 See notes to consolidated financial statements. 5 Table of Contents OMEGA HEALTHCARE INVESTORS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Six Months Ended June 30, 2020 and 2019 Unaudited (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common ​ Additional ​ Cumulative ​ ​ ​ Other ​ Total ​ ​ ​ ​ ​ ​ Stock ​ Paid-in ​ Net ​ Cumulative ​ Comprehensive ​ Stockholders’ ​ Noncontrolling ​ Total ​ Par Value Capital Earnings Dividends Paid Loss Equity Interest Equity Balance at December 31, 2019 ​ $ 22,663 ​ $ 5,992,733 ​ $ 2,463,436 ​ $ ( 4,303,546 ) ​ $ ( 39,858 ) ​ $ 4,135,428 ​ $ 201,166 ​ $ 4,336,594 Cumulative effect of accounting change (see Note 1) ​ ​ — ​ ​ — ​ ​ ( 28,028 ) ​ ​ — ​ ​ — ​ ​ ( 28,028 ) ​ ​ ( 757 ) ​ ​ ( 28,785 ) ​ ​ ​ 22,663 ​ ​ 5,992,733 ​ ​ 2,435,408 ​ ​ ( 4,303,546 ) ​ ​ ( 39,858 ) ​ ​ 4,107,400 ​ ​ 200,409 ​ ​ 4,307,809 Grant of restricted stock to company directors ​ ​ 1 ​ ​ ( 1 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ ​ — ​ ​ 9,258 ​ ​ — ​ ​ — ​ ​ — ​ ​ 9,258 ​ ​ — ​ ​ 9,258 Vesting/exercising of equity compensation plan, net of tax withholdings ​ ​ 13 ​ ​ ( 3,382 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,369 ) ​ ​ — ​ ​ ( 3,369 ) Dividend reinvestment and stock purchase plan ​ ​ 9 ​ ​ 3,738 ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,747 ​ ​ — ​ ​ 3,747 Deferred compensation directors ​ ​ — ​ ​ 118 ​ ​ — ​ ​ — ​ ​ — ​ ​ 118 ​ ​ — ​ ​ 118 Equity Program ​ ​ 5 ​ ​ 1,792 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,797 ​ ​ — ​ ​ 1,797 Common dividends declared ($ 1.34 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 307,282 ) ​ ​ — ​ ​ ( 307,282 ) ​ ​ — ​ ​ ( 307,282 ) Vesting/exercising of Omega OP units ​ ​ — ​ ​ ( 5,433 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 5,433 ) ​ ​ 5,433 ​ ​ — Conversion and redemption of Omega OP Units to common stock ​ ​ 3 ​ ​ 1,149 ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,152 ​ ​ ( 1,152 ) ​ ​ — Omega OP Units distributions ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 11,851 ) ​ ​ ( 11,851 ) Comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 19,235 ) ​ ​ ( 19,235 ) ​ ​ ( 508 ) ​ ​ ( 19,743 ) Cash flow hedges ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,142 ) ​ ​ ( 7,142 ) ​ ​ ( 189 ) ​ ​ ( 7,331 ) Net income ​ ​ — ​ ​ — ​ ​ 189,222 ​ ​ — ​ ​ — ​ ​ 189,222 ​ ​ 5,017 ​ ​ 194,239 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 167,165 Balance at June 30, 2020 ​ $ 22,694 ​ $ 5,999,972 ​ $ 2,624,630 ​ $ ( 4,610,828 ) ​ $ ( 66,235 ) ​ $ 3,970,233 ​ $ 197,159 ​ $ 4,167,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2018 ​ $ 20,235 ​ $ 5,074,544 ​ $ 2,130,511 ​ $ ( 3,739,197 ) ​ $ ( 41,652 ) ​ $ 3,444,441 ​ $ 320,043 ​ $ 3,764,484 Cumulative effect of accounting change ​ ​ — ​ ​ — ​ ​ ( 8,198 ) ​ ​ — ​ ​ — ​ ​ ( 8,198 ) ​ ​ ( 292 ) ​ ​ ( 8,490 ) Balance at April 1, 2019 ​ ​ 20,235 ​ ​ 5,074,544 ​ ​ 2,122,313 ​ ​ ( 3,739,197 ) ​ ​ ( 41,652 ) ​ ​ 3,436,243 ​ ​ 319,751 ​ ​ 3,755,994 Grant of restricted stock to company directors ​ ​ 2 ​ ​ ( 2 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ ​ — ​ ​ 8,110 ​ ​ — ​ ​ — ​ ​ — ​ ​ 8,110 ​ ​ — ​ ​ 8,110 Vesting/exercising of equity compensation plan, net of tax withholdings ​ ​ 11 ​ ​ ( 2,968 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,957 ) ​ ​ — ​ ​ ( 2,957 ) Dividend reinvestment and stock purchase plan ​ ​ 148 ​ ​ 53,955 ​ ​ — ​ ​ — ​ ​ — ​ ​ 54,103 ​ ​ — ​ ​ 54,103 Deferred compensation directors ​ ​ — ​ ​ 108 ​ ​ — ​ ​ — ​ ​ — ​ ​ 108 ​ ​ — ​ ​ 108 Equity Shelf Program ​ ​ 295 ​ ​ 102,574 ​ ​ — ​ ​ — ​ ​ — ​ ​ 102,869 ​ ​ — ​ ​ 102,869 Issuance of common stock - merger related ​ ​ 748 ​ ​ 280,880 ​ ​ — ​ ​ — ​ ​ — ​ ​ 281,628 ​ ​ — ​ ​ 281,628 Common dividends declared ($ 1.32 per share) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 273,919 ) ​ ​ — ​ ​ ( 273,919 ) ​ ​ — ​ ​ ( 273,919 ) Vesting/exercising of Omega OP units ​ ​ — ​ ​ ( 2,400 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 2,400 ) ​ ​ 2,400 ​ ​ — Conversion and redemption of Omega OP Units to common stock ​ ​ 169 ​ ​ 65,241 ​ ​ — ​ ​ — ​ ​ — ​ ​ 65,410 ​ ​ ( 65,410 ) ​ ​ — Omega OP Units distributions ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12,133 ) ​ ​ ( 12,133 ) Noncontrolling interest - consolidated joint venture ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 228 ​ ​ 228 Comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 1,252 ) ​ ​ ( 1,252 ) ​ ​ ( 39 ) ​ ​ ( 1,291 ) Cash flow hedges ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 7,815 ) ​ ​ ( 7,815 ) ​ ​ ( 272 ) ​ ​ ( 8,087 ) Net income ​ ​ — ​ ​ — ​ ​ 142,843 ​ ​ — ​ ​ — ​ ​ 142,843 ​ ​ 5,010 ​ ​ 147,853 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 138,475 Balance at June 30, 2019 ​ $ 21,608 ​ $ 5,580,042 ​ $ 2,265,156 ​ $ ( 4,013,116 ) ​ $ ( 50,719 ) ​ $ 3,802,971 ​ $ 249,535 ​ $ 4,052,506 See notes to consolidated financial statements. ​ ​ ​ ​ 6 Table of Contents OMEGA HEALTHCARE INVESTORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ 2020 2019 Cash flows from operating activities ​ ​ Net income ​ $ 194,239 ​ $ 147,853 ​ Adjustment to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Depreciation and amortization ​ 166,229 ​ 144,489 ​ Impairment on real estate properties ​ 15,627 ​ 7,561 ​ (Recovery) impairment on direct financing leases ​ ( 752 ) ​ 7,700 ​ Provision for rental income ​ 1,205 ​ 7,959 ​ Provision for credit losses ​ 1,501 ​ — ​ Interest – amortization of deferred financing costs ​ 4,922 ​ 4,476 ​ Accretion of direct financing leases ​ 12 ​ 9 ​ Stock-based compensation expense ​ 9,258 ​ 8,598 ​ (Gain) loss on assets sold – net ​ ( 14,681 ) ​ 264 ​ Amortization of acquired in-place leases – net ​ ( 4,798 ) ​ ( 3,386 ) ​ Effective yield receivable on mortgage notes ​ ( 146 ) ​ ( 343 ) ​ Interest paid-in-kind ​ ​ ( 3,838 ) ​ ​ ( 3,203 ) ​ Income from unconsolidated joint ventures ​ ​ ( 1,739 ) ​ ​ — ​ Change in operating assets and liabilities – net: ​ ​ ​ ​ Contractual receivables ​ 5,812 ​ 1,588 ​ Straight-line rent receivables ​ ( 5,764 ) ​ ( 24,082 ) ​ Lease inducements ​ ( 24,245 ) ​ ( 15,494 ) ​ Other operating assets and liabilities ​ ( 13,398 ) ​ ( 18,577 ) ​ Net cash provided by operating activities ​ 329,444 ​ 265,412 ​ Cash flows from investing activities ​ ​ ​ ​ Acquisition of a business, net of cash acquired ​ — ​ ( 59,616 ) ​ Acquisition of real estate ​ ( 25,935 ) ​ ( 6,397 ) ​ Acquisition deposit ​ — ​ ( 24,532 ) ​ Net proceeds from sale of real estate investments ​ 56,117 ​ 9,048 ​ Investments in construction in progress ​ ( 46,750 ) ​ ( 75,026 ) ​ Proceeds from direct financing lease and related trust ​ ​ 14,897 ​ ​ 88,730 ​ Placement of mortgage loans ​ ( 52,653 ) ​ ( 9,670 ) ​ Collection of mortgage principal ​ 2,549 ​ 42,525 ​ Investments in unconsolidated joint ventures ​ ​ ( 1,971 ) ​ ​ — ​ Distributions from unconsolidated joint ventures in excess of earnings ​ 482 ​ 2,089 ​ Capital improvements to real estate investments ​ ( 24,374 ) ​ ( 24,604 ) ​ Receipts from insurance proceeds ​ 346 ​ 5,834 ​ Investments in other investments ​ ( 67,692 ) ​ ( 13,729 ) ​ Proceeds from other investments ​ 48,244 ​ 50,336 ​ Net cash used in investing activities ​ ( 96,740 ) ​ ( 15,012 ) ​ Cash flows from financing activities ​ ​ ​ Proceeds from credit facility borrowings ​ 762,466 ​ 681,000 ​ Payments on credit facility borrowings ​ ( 666,000 ) ​ ( 779,100 ) ​ Receipts of other long-term borrowings ​ — ​ 2,275 ​ Payments of other long-term borrowings ​ ( 3,704 ) ​ — ​ Receipts from dividend reinvestment plan ​ 3,747 ​ 54,103 ​ Payments for exercised options and restricted stock ​ ( 3,369 ) ​ ( 3,195 ) ​ Net proceeds from issuance of common stock ​ 1,797 ​ 102,869 ​ Dividends paid ​ ( 307,164 ) ​ ( 273,811 ) ​ Noncontrolling members' contributions to consolidated joint venture ​ ​ — ​ ​ 228 ​ Distributions to Omega OP Unit Holders ​ ( 11,851 ) ​ ( 12,133 ) ​ Net cash used in financing activities ​ ( 224,078 ) ​ ( 227,764 ) ​ Effect of foreign currency translation on cash, cash equivalents and restricted cash ​ ( 441 ) ​ ( 169 ) ​ Increase in cash, cash equivalents and restricted cash ​ 8,185 ​ 22,467 ​ Cash, cash equivalents and restricted cash at beginning of period ​ 33,380 ​ 11,671 ​ Cash, cash equivalents and restricted cash at end of period ​ $ 41,565 ​ $ 34,138 ​ ​ See notes to consolidated financial statements . ​ 7 Table of Contents OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 2019 ​ ​ (Unaudited) ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ ​ Real estate properties ​ ​ Real estate investments ​ $ 8,807,944 ​ $ 8,985,994 ​ Less accumulated depreciation ​ ( 1,902,587 ) ​ ( 1,787,425 ) ​ Real estate investments – net ​ 6,905,357 ​ 7,198,569 ​ Investments in direct financing leases – net ​ 10,870 ​ 11,488 ​ Mortgage notes receivable – net ​ 886,029 ​ 773,563 ​ ​ ​ 7,802,256 ​ 7,983,620 ​ Other investments – net ​ 434,653 ​ 419,228 ​ Investments in unconsolidated joint ventures ​ 195,546 ​ 199,884 ​ Assets held for sale – net ​ 70,516 ​ 4,922 ​ Total investments ​ 8,502,971 ​ 8,607,654 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ 37,022 ​ 24,117 ​ Restricted cash ​ 4,543 ​ 9,263 ​ Contractual receivables – net ​ 27,579 ​ 27,122 ​ Other receivables and lease inducements ​ ​ 403,313 ​ ​ 381,091 ​ Goodwill ​ 643,491 ​ 644,415 ​ Other assets ​ 68,665 ​ 102,462 ​ Total assets ​ $ 9,687,584 ​ $ 9,796,124 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND OWNERS’ EQUITY ​ ​ ​ ​ Term loan – net ​ $ 74,812 ​ $ 74,763 ​ Secured borrowings ​ ​ 385,976 ​ ​ 389,680 ​ Accrued expenses and other liabilities ​ 218,942 ​ 245,406 ​ Deferred income taxes ​ 9,675 ​ 11,350 ​ Intercompany loans payable ​ 4,830,787 ​ 4,738,331 ​ Total liabilities ​ 5,520,192 ​ 5,459,530 ​ ​ ​ ​ ​ ​ ​ ​ ​ Owners’ Equity: ​ ​ ​ General partners’ equity ​ 3,970,233 ​ 4,135,428 ​ Limited partners’ equity ​ 196,949 ​ 200,950 ​ Total owners’ equity ​ 4,167,182 ​ 4,336,378 ​ Noncontrolling interest ​ ​ 210 ​ ​ 216 ​ Total equity ​ ​ 4,167,392 ​ ​ 4,336,594 ​ Total liabilities and equity ​ $ 9,687,584 ​ $ 9,796,124 ​ ​ See notes to consolidated financial statements . ​ 8 Table of Contents OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS Unaudited (in thousands, except per unit amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rental income ​ $ 221,532 ​ $ 194,817 ​ $ 443,032 ​ $ 386,994 ​ Income from direct financing leases ​ 259 ​ 259 ​ 517 ​ 519 ​ Mortgage interest income ​ 21,680 ​ 18,832 ​ 41,365 ​ 36,966 ​ Other investment income ​ 10,932 ​ 11,133 ​ 21,584 ​ 23,047 ​ Miscellaneous income ​ 1,992 ​ 238 ​ 2,921 ​ 1,441 ​ Total operating revenues ​ 256,395 ​ 225,279 ​ 509,419 ​ 448,967 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expenses ​ ​ ​ ​ ​ Depreciation and amortization ​ 83,586 ​ 73,637 ​ 166,229 ​ 144,489 ​ General and administrative ​ 13,969 ​ 13,875 ​ 29,892 ​ 30,008 ​ Real estate taxes ​ ​ 3,655 ​ ​ 4,030 ​ ​ 7,321 ​ ​ 7,912 ​ Acquisition and merger related costs ​ 251 ​ 1,236 ​ 26 ​ 4,185 ​ Impairment on real estate properties ​ 11,988 ​ 5,709 ​ 15,627 ​ 5,709 ​ (Recovery) impairment on direct financing leases ​ ( 752 ) ​ — ​ ( 752 ) ​ 7,700 ​ Provision for credit losses ​ 15 ​ — ​ 1,501 ​ — ​ Total operating expenses ​ 112,712 ​ 98,487 ​ 219,844 ​ 200,003 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other operating income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) on assets sold – net ​ ​ 12,843 ​ ​ ( 267 ) ​ ​ 14,681 ​ ​ ( 264 ) ​ Operating income ​ 156,526 ​ 126,525 ​ 304,256 ​ 248,700 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ Interest income and other – net ​ 141 ​ ( 191 ) ​ ( 593 ) ​ 146 ​ Interest expense ​ ( 52,791 ) ​ ( 48,380 ) ​ ( 105,532 ) ​ ( 96,480 ) ​ Interest – amortization of deferred financing costs ​ ( 2,461 ) ​ ( 2,238 ) ​ ( 4,922 ) ​ ( 4,476 ) ​ Realized gain (loss) on foreign exchange ​ 1 ​ ( 195 ) ​ ( 69 ) ​ ( 169 ) ​ Total other expense ​ ( 55,110 ) ​ ( 51,004 ) ​ ( 111,116 ) ​ ( 100,979 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income tax expense and income from unconsolidated joint ventures ​ 101,416 ​ 75,521 ​ 193,140 ​ 147,721 ​ Income tax expense ​ ( 858 ) ​ ( 793 ) ​ ( 1,863 ) ​ ( 1,468 ) ​ Income from unconsolidated joint ventures ​ 1,402 ​ 943 ​ 2,962 ​ 1,600 ​ Net income ​ ​ 101,960 ​ ​ 75,671 ​ ​ 194,239 ​ ​ 147,853 ​ Net loss attributable to noncontrolling interest ​ ​ 3 ​ ​ — ​ ​ 6 ​ ​ — ​ Net income available to owners ​ $ 101,963 ​ $ 75,671 ​ $ 194,245 ​ $ 147,853 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per unit: ​ ​ ​ ​ ​ Basic: ​ ​ ​ ​ ​ Net income available to owners' ​ $ 0.44 ​ $ 0.35 ​ $ 0.83 ​ $ 0.69 ​ Diluted: ​ ​ ​ ​ ​ Net income ​ $ 0.43 ​ $ 0.34 ​ $ 0.83 ​ $ 0.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average Omega OP Units outstanding, basic ​ 233,493 ​ 218,887 ​ 233,369 ​ 215,362 ​ Weighted-average Omega OP Units outstanding, diluted ​ 234,523 ​ 220,479 ​ 234,515 ​ 217,002 ​ ​ See notes to consolidated financial statements . ​ 9 Table of Contents OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Unaudited (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 Net income ​ $ 101,960 ​ $ 75,671 ​ $ 194,239 ​ $ 147,853 ​ Other comprehensive (loss) income: ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ ( 972 ) ​ ( 5,766 ) ​ ( 19,743 ) ​ ( 1,291 ) ​ Cash flow hedges ​ 513 ​ ( 5,384 ) ​ ( 7,331 ) ​ ( 8,087 ) ​ Total other comprehensive (loss) income ​ ( 459 ) ​ ( 11,150 ) ​ ( 27,074 ) ​ ( 9,378 ) ​ Comprehensive income ​ ​ 101,501 ​ ​ 64,521 ​ ​ 167,165 ​ ​ 138,475 ​ Comprehensive loss attributable to noncontrolling interest ​ ​ 3 ​ ​ — ​ ​ 6 ​ ​ — ​ Comprehensive income attributable to owners ​ $ 101,504 ​ $ 64,521 ​ $ 167,171 ​ $ 138,475 ​ ​ See notes to consolidated financial statements . ​ 10 Table of Contents OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY Three Months Ended June 30, 2020 and 2019 Unaudited (in thousands, except per unit amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General ​ Limited ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Partners’ ​ Partners’ ​ Total ​ General ​ Limited ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Omega ​ Omega ​ Omega ​ Partners’ ​ Partners’ ​ Total Owners' ​ Noncontrolling ​ Total ​ ​ OP Units ​ OP Units ​ OP Units ​ Equity ​ Equity ​ Equity ​ Interest ​ Equity Balance at March 31, 2020 ​ ​ 226,866 ​ ​ 5,985 ​ ​ 232,851 ​ $ 4,021,575 ​ $ 196,857 ​ $ 4,218,432 ​ $ 213 ​ $ 4,218,645 Contributions from partners ​ ​ 77 ​ ​ — ​ ​ 77 ​ ​ 5,244 ​ ​ — ​ ​ 5,244 ​ ​ — ​ ​ 5,244 Distributions to partners ​ — ​ — ​ — ​ ( 152,621 ) ​ ( 4,561 ) ​ ​ ( 157,182 ) ​ ​ — ​ ​ ( 157,182 ) Vesting/exercising of Omega OP Units ​ ​ — ​ ​ 110 ​ ​ 110 ​ ( 2,825 ) ​ 2,825 ​ ​ — ​ ​ — ​ ​ — Omega OP Unit conversions ​ — ​ ( 27 ) ​ ( 27 ) ​ — ​ ( 816 ) ​ ​ ( 816 ) ​ ​ — ​ ​ ( 816 ) Comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ — ​ — ​ — ​ ( 947 ) ​ ( 25 ) ​ ​ ( 972 ) ​ ​ — ​ ​ ( 972 ) Cash flow hedges ​ — ​ — ​ — ​ 500 ​ 13 ​ ​ 513 ​ ​ — ​ ​ 513 Net income (loss) ​ — ​ — ​ — ​ 99,307 ​ 2,656 ​ ​ 101,963 ​ ​ ( 3 ) ​ ​ 101,960 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 101,501 Balance at June 30, 2020 ​ 226,943 ​ 6,068 ​ ​ 233,011 ​ $ 3,970,233 ​ $ 196,949 ​ $ 4,167,182 ​ $ 210 ​ $ 4,167,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at March 31, 2019 ​ ​ 207,001 ​ ​ 7,277 ​ ​ 214,278 ​ $ 3,545,802 ​ $ 259,612 ​ $ 3,805,414 ​ $ 228 ​ $ 3,805,642 Cumulative effect of accounting change ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 8,198 ) ​ ​ ( 292 ) ​ ​ ( 8,490 ) ​ ​ — ​ ​ ( 8,490 ) Balance at April 1, 2019 ​ ​ 207,001 ​ ​ 7,277 ​ ​ 214,278 ​ ​ 3,537,604 ​ ​ 259,320 ​ ​ 3,796,924 ​ ​ 228 ​ ​ 3,797,152 Contributions from partners ​ ​ 9,088 ​ ​ — ​ ​ 9,088 ​ ​ 342,338 ​ ​ — ​ ​ 342,338 ​ ​ — ​ ​ 342,338 Distributions to partners ​ — ​ — ​ — ​ ( 137,232 ) ​ ( 5,120 ) ​ ​ ( 142,352 ) ​ ​ — ​ ​ ( 142,352 ) Vesting/exercising of Omega OP Units ​ ​ — ​ ​ 54 ​ ​ 54 ​ ( 2,102 ) ​ ​ 2,102 ​ ​ — ​ ​ — ​ ​ — Omega OP Unit conversions ​ — ​ ( 251 ) ​ ( 251 ) ​ — ​ ​ ( 9,153 ) ​ ​ ( 9,153 ) ​ ​ — ​ ​ ( 9,153 ) Comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ — ​ — ​ — ​ ( 5,573 ) ​ ​ ( 193 ) ​ ​ ( 5,766 ) ​ ​ — ​ ​ ( 5,766 ) Cash flow hedges ​ — ​ — ​ — ​ ( 5,205 ) ​ ​ ( 179 ) ​ ​ ( 5,384 ) ​ ​ — ​ ​ ( 5,384 ) Net income ​ — ​ — ​ — ​ 73,141 ​ ​ 2,530 ​ ​ 75,671 ​ ​ — ​ ​ 75,671 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 64,521 Balance at June 30, 2019 ​ 216,089 ​ 7,080 ​ ​ 223,169 ​ $ 3,802,971 ​ $ 249,307 ​ $ 4,052,278 ​ $ 228 ​ $ 4,052,506 ​ See notes to consolidated financial statements. ​ 11 Table of Contents ​ OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY Six Months Ended June 30, 2020 and 2019 Unaudited (in thousands, except per unit amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General ​ Limited ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Partners’ ​ Partners’ ​ Total ​ General ​ Limited ​ Total ​ ​ ​ ​ ​ ​ Omega ​ Omega ​ Omega ​ Partners’ ​ Partners’ ​ Owners' ​ Noncontrolling ​ Total ​ ​ OP Units ​ OP Units ​ OP Units ​ Equity ​ Equity ​ Equity ​ Interest ​ Equity Balance at December 31, 2019 ​ 226,631 ​ 5,931 ​ ​ 232,562 ​ $ 4,135,428 ​ $ 200,950 ​ $ 4,336,378 ​ $ 216 ​ $ 4,336,594 Cumulative effect of accounting change ​ — ​ — ​ — ​ ( 28,028 ) ​ ( 757 ) ​ ( 28,785 ) ​ — ​ ​ ( 28,785 ) ​ ​ ​ 226,631 ​ ​ 5,931 ​ ​ 232,562 ​ ​ 4,107,400 ​ ​ 200,193 ​ ​ 4,307,593 ​ ​ 216 ​ ​ 4,307,809 Contributions from partners ​ ​ 312 ​ ​ — ​ ​ 312 ​ ​ 12,703 ​ ​ — ​ ​ 12,703 ​ ​ — ​ ​ 12,703 Distributions to partners ​ — ​ — ​ — ​ ( 307,282 ) ​ ( 11,851 ) ​ ( 319,133 ) ​ — ​ ​ ( 319,133 ) Vesting/exercising of Omega OP Units ​ — ​ 172 ​ 172 ​ ( 5,433 ) ​ 5,433 ​ — ​ — ​ ​ — Omega OP Unit conversions ​ — ​ ( 35 ) ​ ( 35 ) ​ — ​ ( 1,152 ) ​ ( 1,152 ) ​ — ​ ​ ( 1,152 ) Comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ — ​ — ​ — ​ ( 19,235 ) ​ ( 508 ) ​ ( 19,743 ) ​ — ​ ​ ( 19,743 ) Cash flow hedges ​ — ​ — ​ — ​ ( 7,142 ) ​ ( 189 ) ​ ( 7,331 ) ​ — ​ ​ ( 7,331 ) Net income (loss) ​ — ​ — ​ — ​ 189,222 ​ 5,023 ​ 194,245 ​ ( 6 ) ​ ​ 194,239 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 167,165 Balance at June 30, 2020 ​ 226,943 ​ 6,068 ​ ​ 233,011 ​ $ 3,970,233 ​ $ 196,949 ​ $ 4,167,182 ​ $ 210 ​ $ 4,167,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2018 ​ 202,346 ​ 8,714 ​ ​ 211,060 ​ $ 3,444,441 ​ $ 320,043 ​ $ 3,764,484 ​ $ — ​ $ 3,764,484 Cumulative effect of accounting change ​ — ​ — ​ — ​ ( 8,198 ) ​ ( 292 ) ​ ( 8,490 ) ​ — ​ ​ ( 8,490 ) Balance at April 1, 2019 ​ ​ 202,346 ​ ​ 8,714 ​ ​ 211,060 ​ ​ 3,436,243 ​ ​ 319,751 ​ ​ 3,755,994 ​ ​ — ​ ​ 3,755,994 Contributions from partners ​ ​ 13,743 ​ ​ — ​ ​ 13,743 ​ ​ 509,271 ​ ​ — ​ ​ 509,271 ​ ​ — ​ ​ 509,271 Distributions to partners ​ — ​ — ​ — ​ ( 273,919 ) ​ ( 12,133 ) ​ ( 286,052 ) ​ — ​ ​ ( 286,052 ) Noncontrolling interest - consolidated joint venture ​ — ​ — ​ — ​ — ​ — ​ — ​ 228 ​ ​ 228 Vesting/exercising of Omega OP Units ​ ​ — ​ 63 ​ 63 ​ ( 2,400 ) ​ 2,400 ​ — ​ — ​ ​ — Omega OP Unit conversions ​ — ​ ( 1,697 ) ​ ( 1,697 ) ​ — ​ ( 65,410 ) ​ ( 65,410 ) ​ — ​ ​ ( 65,410 ) Comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation ​ — ​ — ​ — ​ ( 1,252 ) ​ ( 39 ) ​ ( 1,291 ) ​ — ​ ​ ( 1,291 ) Cash flow hedges ​ — ​ — ​ — ​ ( 7,815 ) ​ ( 272 ) ​ ( 8,087 ) ​ — ​ ​ ( 8,087 ) Net income ​ — ​ — ​ — ​ 142,843 ​ 5,010 ​ 147,853 ​ — ​ ​ 147,853 Total comprehensive income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 138,475 Balance at June 30, 2019 ​ 216,089 ​ 7,080 ​ ​ 223,169 ​ $ 3,802,971 ​ $ 249,307 ​ $ 4,052,278 ​ $ 228 ​ $ 4,052,506 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See notes to consolidated financial statements. ​ ​ ​ 12 Table of Contents OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended ​ ​ ​ June 30, ​ ​ 2020 2019 Cash flows from operating activities ​ ​ Net income ​ $ 194,239 ​ $ 147,853 ​ Adjustment to reconcile net income to net cash provided by operating activities: ​ ​ ​ Depreciation and amortization ​ 166,229 ​ 144,489 ​ Impairment on real estate properties ​ 15,627 ​ 7,561 ​ (Recovery) impairment loss on direct financing leases ​ ( 752 ) ​ 7,700 ​ Provision for rental income ​ 1,205 ​ 7,959 ​ Provision for credit losses ​ 1,501 ​ — ​ Interest – amortization of deferred financing costs ​ 4,922 ​ 4,476 ​ Accretion of direct financing leases ​ 12 ​ 9 ​ Stock-based compensation expense ​ 9,258 ​ 8,598 ​ (Gain) loss on assets sold – net ​ ( 14,681 ) ​ 264 ​ Amortization of acquired in-place leases – net ​ ( 4,798 ) ​ ( 3,386 ) ​ Effective yield receivable on mortgage notes ​ ( 146 ) ​ ( 343 ) ​ Interest paid-in-kind ​ ​ ( 3,838 ) ​ ​ ( 3,203 ) ​ Income from unconsolidated joint ventures ​ ​ ( 1,739 ) ​ ​ — ​ Change in operating assets and liabilities – net: ​ ​ ​ Contractual receivables ​ 5,812 ​ 1,588 ​ Straight-line rent receivables ​ ( 5,764 ) ​ ( 24,082 ) ​ Lease inducements ​ ( 24,245 ) ​ ( 15,494 ) ​ Other operating assets and liabilities ​ ( 13,398 ) ​ ( 18,577 ) ​ Net cash provided by operating activities ​ 329,444 ​ 265,412 ​ Cash flows from investing activities ​ ​ ​ Acquisition of a business, net of cash acquired ​ — ​ ( 59,616 ) ​ Acquisition of real estate ​ ( 25,935 ) ​ ( 6,397 ) ​ Acquisition deposit ​ — ​ ( 24,532 ) ​ Net proceeds from sale of real estate investments ​ ​ 56,117 ​ ​ 9,048 ​ Investments in construction in progress ​ ( 46,750 ) ​ ( 75,026 ) ​ Proceeds from direct financing lease and related trust ​ 14,897 ​ 88,730 ​ Placement of mortgage loans ​ ( 52,653 ) ​ ( 9,670 ) ​ Collection of mortgage principal ​ 2,549 ​ 42,525 ​ Investments in unconsolidated joint ventures ​ ( 1,971 ) ​ — ​ Distributions from unconsolidated joint ventures in excess of earnings ​ 482 ​ 2,089 ​ Capital improvements to real estate investments ​ ( 24,374 ) ​ ( 24,604 ) ​ Receipts from insurance proceeds ​ 346 ​ 5,834 ​ Investments in other investments ​ ( 67,692 ) ​ ( 13,729 ) ​ Proceeds from other investments ​ 48,244 ​ 50,336 ​ Net cash used in investing activities ​ ( 96,740 ) ​ ( 15,012 ) ​ Cash flows from financing activities ​ ​ ​ Repayments of secured borrowing ​ ​ ( 3,704 ) ​ ​ — ​ Proceeds from intercompany loans payable to Omega ​ 762,466 ​ 683,275 ​ Repayment of intercompany loans payable to Omega ​ ( 666,000 ) ​ ( 779,100 ) ​ Noncontrolling members' contributions to consolidated joint venture ​ ​ — ​ ​ 228 ​ Equity contributions from general partners ​ 2,175 ​ 153,777 ​ Distributions to general partners ​ ( 307,164 ) ​ ( 273,811 ) ​ Distributions to limited partners ​ ( 11,851 ) ​ ( 12,133 ) ​ Net cash used in financing activities ​ ( 224,078 ) ​ ( 227,764 ) ​ Effect of foreign currency translation on cash, cash equivalents and restricted cash ​ ( 441 ) ​ ( 169 ) ​ Increase in cash, cash equivalents and restricted cash ​ 8,185 ​ 22,467 ​ Cash, cash equivalents and restricted cash at beginning of period ​ 33,380 ​ 11,671 ​ Cash, cash equivalents and restricted cash at end of period ​ $ 41,565 ​ $ 34,138 ​ See notes to consolidated financial statements . ​ ​ 13 Table of Contents OMEGA HEALTHCARE INVESTORS, INC. AND OHI HEALTHCARE PROPERTIES LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Unaudited June 30, 2020 NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Business Overview and Organization Omega Healthcare Investors, Inc. (“Omega”) was formed as a real estate investment trust (“REIT”) and incorporated in the State of Maryland on March 31, 1992. Omega is structured as an umbrella partnership REIT (“UPREIT”) under which all of Omega’s assets are owned directly or indirectly by, and all of Omega’s operations are conducted directly or indirectly through, its operating partnership subsidiary, OHI Healthcare Properties Limited Partnership (“Omega OP”). Omega OP was formed as a limited partnership and organized in the State of Delaware on October 24, 2014. Unless stated otherwise or the context otherwise requires, the terms the “Company,” “we,” “our” and “us” means Omega and Omega OP, collectively. Omega has one reportable segment consisting of investments in healthcare-related real estate properties located in the United States (“U.S.”) and the United Kingdom (“U.K.”). Our core business is to provide financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities (“SNFs”), assisted living facilities (“ALFs”), and to a lesser extent, independent living facilities (“ILFs”), rehabilitation and acute care facilities (“specialty facilities”) and medical office buildings (“MOBs”). Our core portfolio consists of long-term leases and mortgage agreements. All of our leases are “triple-net” leases, which require the operators (we use the term “operator” to refer to our tenants and mortgagors and their affiliates who manage and/or operate our properties) to pay all property-related expenses. Our mortgage revenue derives from fixed rate mortgage loans, which are secured by first mortgage liens on the underlying real estate and personal property of the mortgagor. Our other investment income derives from fixed and variable rate loans to our operators and/or their principals to fund working capital and capital expenditures. These loans, which may be either unsecured or secured by the collateral of the borrower, are classified as other investments. Omega OP is governed by the Second Amended and Restated Agreement of Limited Partnership of OHI Healthcare Properties Limited Partnership, dated as of April 1, 2015 (the “Partnership Agreement”). Omega has exclusive control over Omega OP’s day-to-day management pursuant to the Partnership Agreement. As of June 30, 2020, Omega owned approximately 97 % of the issued and outstanding units of partnership interest in Omega OP (“Omega OP Units”), and investors owned approximately 3 % of the outstanding Omega OP Units. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the interim periods reported herein are not necessarily indicative of results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the financial statements and the footnotes thereto included in our latest Annual Report on Form 10-K filed with the SEC on February 28, 2020. Omega’s consolidated financial statements include the accounts of (i) Omega, (ii) Omega OP, (iii) all direct and indirect wholly owned subsidiaries of Omega and (iv) other entities in which Omega or Omega OP has a majority voting interest and control. All intercompany transactions and balances have been eliminated in consolidation, and Omega’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests. 14 Table of Contents Omega OP’s consolidated financial statements include the accounts of (i) Omega OP, (ii) all direct and indirect wholly owned subsidiaries of Omega OP and (iii) other entities in which Omega OP has a majority voting interest and control. All intercompany transactions and balances have been eliminated in consolidation, and Omega OP’s net earnings are reduced by the portion of net earnings attributable to noncontrolling interests. Risks and Uncertainties The Company is subject to certain risks and uncertainties affecting the healthcare industry, including those stemming from the 2019 novel coronavirus (“COVID-19”) global pandemic described below, which has disproportionately impacted the senior care sector, as well as, those stemming from healthcare legislation and changing regulation by federal, state and local governments, including those driven by the COVID-19 pandemic. Additionally, we are subject to risks and uncertainties as a result of changes affecting operators of nursing home facilities due to the actions of governmental agencies and insurers to limit the rising cost of healthcare services. On March 11, 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 pandemic has led governments and other authorities in the U.S., U.K. and around the world to impose measures intended to control its spread, including but not limited to, the mandated use of personal protective equipment, restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders, etc. While certain regions have entered various phases of reopening, there continues to be a wide range of government restrictions in place and uncertainty around the potential duration of the pandemic. As of July 16, 2020, less than half of our facilities have reported a positive case of COVID-19 among the residents and/or operator employee populations. Many of our operators have reported incurring significant cost increases as a result of the COVID-19 pandemic, with dramatic increases for facilities with positive cases. We believe these increases primarily stem from elevated labor costs, including increased use of overtime and bonus pay, as well as a significant increase in both the cost and usage of personal protective equipment, testing equipment and processes and supplies. In terms of occupancy levels, many of our operators have reported experiencing declines, in part due to the elimination or suspension of elective hospital procedures, fewer discharges from hospitals to SNFs and higher hospital readmittances from SNFs. ​ To the extent government support is not sufficient or timely to offset these impacts, or to the extent these trends continue or accelerate and are not offset by additional government relief that is sufficient or timely, the operating results of our operators are likely to be adversely affected, some may be unwilling or unable to pay their contractual obligations to us in full or on a timely basis and we may be unable to restructure such obligations on terms as favorable to us as those currently in place. Even if operators are able to avail themselves of government relief to offset some of these costs, they may face challenges in complying with the terms and conditions of government support and may face longer-term adverse impacts to their personnel and business operations from the pandemic, including potential patient litigation and decreased demand for their services. The extent of the COVID-19 pandemic’s effect on our and our operators’ operational and financial performance will depend on future developments, including the ultimate duration, spread and intensity of the outbreak, which may depend on factors such as the development and implementation of an effective vaccine and treatments for COVID-19 and the efficacy of other policies and measures that may mitigate the impact of the pandemic, all of which are uncertain and difficult to predict. Due to the speed with which the situation is changing, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material. 15 Table of Contents ​ Variable Interest Entities GAAP requires us to identify entities for which control is achieved through means other than voting rights and to determine which business enterprise is the primary beneficiary of variable interest entities (“VIEs”). A VIE is broadly defined as an entity with one or more of the following characteristics: (a) the total equity investment at risk is insufficient to finance the entity’s activities without additional subordinated financial support; (b) as a group, the holders of the equity investment at risk lack (i) the ability to make decisions about the entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests, and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. We may change our original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affects the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. Our variable interests in VIEs may be in the form of equity ownership, leases, guarantees and/or loans with our operators. We analyze our agreements and investments to determine whether our operators or unconsolidated joint ventures are VIEs and, if so, whether we are the primary beneficiary. We consolidate a VIE when we determine that we are its primary beneficiary. We identify the primary beneficiary of a VIE as the enterprise that has both: (i) the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the entity. Factors considered in determining whether we are the primary beneficiary of an entity include: (i) our voting rights, if any; (ii) our involvement in day-to-day capital and operating decisions; (iii) our risk and reward sharing; (iv) the financial condition of the operator or joint venture and (iv) our representation on the VIE’s board of directors. We perform this analysis on an ongoing basis. As of June 30, 2020, we have not consolidated any VIEs, as we do not have the power to direct the activities of any VIEs that most significantly impact their economic performance and we do not have the obligation to absorb losses or receive benefits of the VIEs that could be significant to the entity. Real Estate Investments and Depreciation The costs of significant improvements, renovations and replacements, including interest are capitalized. In addition, we capitalize leasehold improvements when certain criteria are met, including when we supervise construction and will own the improvement. Expenditures for maintenance and repairs are charged to operations as they are incurred. Depreciation is computed on a straight-line basis over the estimated useful lives ranging from 20 to 40 years for buildings, eight to 15 years for site improvements, and three to 10 years for furniture and equipment. Leasehold interests are amortized over the shorter of the estimated useful life or term of the lease. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand and highly liquid investments with a maturity date of three months or less when purchased. These investments are stated at cost, which approximates fair value. The majority of our cash, cash equivalents and restricted cash are held at major commercial banks. Certain cash account balances exceed FDIC insurance limits of $ 250,000 per account and, as a result, there is a concentration of credit risk related to amounts in excess of the insurance limits. We regularly monitor the financial stability of these financial institutions and believe that we are not exposed to any significant credit risk in cash, cash equivalents or restricted cash. 16 Table of Contents Restricted Cash Restricted cash consists primarily of liquidity deposits escrowed for tenant obligations required by us pursuant to certain contractual terms and other deposits required by the U.S. Department of Housing and Urban Development (“HUD”) in connection with our mortgage borrowings guaranteed by HUD. Real Estate Investment Impairment Management evaluates our real estate investments for impairment indicators at each reporting period, including the evaluation of our assets’ useful lives. The judgment regarding the existence of impairment indicators is based on factors such as, but not limited to, market conditions, operator performance including the current payment status of contractual obligations and expectations of the ability to meet future contractual obligations, legal structure, as well as our intent with respect to holding or disposing of the asset. If indicators of impairment are present, management evaluates the carrying value of the related real estate investments in relation to management’s estimate of future undiscounted cash flows of the underlying facilities. The estimated future undiscounted cash flows are generally based on the related lease which relates to one or more properties and may include cash flows from the eventual disposition of the asset. In some instances, there may be various potential outcomes for a real estate investment and its potential future cash flows. In these instances, the undiscounted future cash flows used to assess the recoverability are probability-weighted based on management’s best estimates as of the date of evaluation. Provisions for impairment losses related to long-lived assets are recognized when expected future undiscounted cash flows based on our intended use of the property are determined to be less than the carrying values of the assets. An adjustment is made to the net carrying value of the real estate investments for the excess of carrying value over fair value. The fair value of the real estate investment is determined based on current market conditions and consider matters such as rental rates and occupancies for comparable properties, recent sales data for comparable properties, and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers. Additionally, our evaluation of fair value may consider valuing the property as a nursing home or other healthcare facility as well as alternative uses. All impairments are taken as a period cost at that time, and depreciation is adjusted going forward to reflect the new value assigned to the asset. Management’s impairment evaluation process, and when applicable, impairment calculations involve estimation of the future cash flows from management’s intended use of the property as well as the fair value of the property. Changes in the facts and circumstances that drive management’s assumptions may result in an impairment to our assets in a future period that could be material to Omega’s results of operations. For the three months ended June 30, 2020 and 2019, we recognized impairment on real estate properties of approximately $ 12.0 million and $ 5.7 million, respectively. For the six months ended June 30, 2020 and 2019, we recognized impairment on real estate properties of approximately $ 15.6 million and $ 5.7 million, respectively. In July of 2020, we executed a Forbearance and Transition Agreement with Daybreak which, among other things, sets forth the parties’ plan to sell or re-lease the Daybreak portfolio, which plan contemplates the potential sale of 28 facilities currently leased to Daybreak to a non-Omega party for $ 100 million, and the Company’s agreement to forbear from exercising certain default remedies during the transition period. As of June 30, 2020, the 28 facilities have a net book value of approximately $ 147 million. As of August 7, 2020, we have not entered into a definitive agreement for the sale of these facilities. We evaluated the facilities for impairment as of June 30, 2020 and concluded that the facilities were not currently impaired, as we believe our projected probability-weighted cash flows exceeded the current net book value of the 28 facilities. In projecting the probability-weighted cash flows, we considered the potential sale of the facilities for $ 100 million and the potential transition of the facilities to other operators to the extent that the sale to the third party does not ultimately close. As of June 30, 2020, we estimated a lower probability of the contemplated sale due to lack of a definitive sale agreement and evidence of buyer financing. To the extent that our assessment of the probability of a potential sale increases in the future, we may be required to record an impairment of approximately $ 47 million on the 28 facilities to reduce the net book value of the 28 facilities to their estimated fair value or fair value less cost to sell and/or record a loss on the sale. 17 Table of Contents On May 26, 2020, we executed an Agreement of Purchase and Sale to sell an acute care hospital located in Nevada to an unrelated third-party for $ 56.5 million. Pursuant to the Agreement of Purchase and Sale, the sale remains subject to a 60-day due diligence period which expired in July 2020. During the second quarter of 2020, we recorded an impairment of approximately $ 2.2 million related to this facility to reduce its net book value to its fair value less costs to sell of approximately $ 55.3 million and reclassified the facility to assets held for sale. In July of 2020, we agreed with the third-party buyer to lower the purchase price to approximately $ 49.0 million. The reduction in the purchase price will result in an additional impairment and/or loss on sale of approximately $ 7.4 million during the third quarter of 2020. Allowance for Losses on Mortgages, Other Investments and Direct Financing Leases The allowances for losses on mortgage notes receivable, other investments and direct financing leases (collectively, our “loans”) are maintained at a level believed adequate to absorb potential losses. The determination of the allowances is based on a quarterly evaluation of these loans, including general economic conditions and estimated collectability of loan payments. We evaluate the collectability of our loans receivable based on a combination of factors, including, but not limited to, delinquency status, financial strength of the borrower and guarantors and the value of the underlying collateral. If such factors indicate that there is greater risk of loan charge-offs, additional allowances or placement on non-accrual status may be required. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due as scheduled according to the contractual terms of the loan agreements. Consistent with this definition, all loans on non-accrual status may be deemed impaired. To the extent circumstances improve and the risk of collectability is diminished, we will return these loans to full accrual status. When management identifies potential loan impairment indicators, the loan is written down to the present value of the expected future cash flows. In cases where expected future cash flows are not readily determinable, the loan is written down to the fair value of the underlying collateral. We may base our valuation on a loan’s observable market price, if any, or the fair value of collateral, net of sales costs, if the repayment of the loan is expected to be provided solely by the sale of the collateral. We account for impaired loans and direct financing leases using (a) the cost-recovery method, and/or (b) the cash basis method. We generally utilize the cost-recovery method for impaired loans or direct financing leases for which impairment reserves were recorded. We utilize the cash basis method for impaired loans or direct financing leases for which no impairment reserves were recorded because the net present value of the discounted cash flows expected under the loan or direct financing lease and/or the underlying collateral supporting the loan or direct financing lease were equal to or exceeded the book value of the loans or direct financing leases. Under the cost-recovery method, we apply cash received against the outstanding loan balance or direct financing lease prior to recording interest income. Under the cash basis method, we apply cash received to principal or interest income based on the terms of the agreement. As of June 30, 2020 and December 31, 2019, we had $ 35.1 million and $ 5.1 million, respectively, of reserves on our loans. For additional information see “Accounting Pronouncements Adopted in 2020,” Note 3 – Direct Financing Leases, Note 4 – Mortgage Notes Receivable, and Note 5 – Other Investments. Goodwill Impairment We assess goodwill for potential impairment during the fourth quarter of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment on an interim basis, we assess qualitative factors such as a significant decline in real estate valuations, current macroeconomic conditions, state of the equity and capital markets and our overall financial and operating performance or a significant decline in the value of our market capitalization, to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of the reporting unit is less than its carrying amount. On an annual basis during the fourth quarter of each fiscal year, or on an interim basis if we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a two-step goodwill impairment test to identify potential impairment and measure the amount of impairment we will recognize, if any. 18 Table of Contents Earnings Per Share/Unit The computation of basic earnings per share/unit (“EPS” or “EPU”) is computed by dividing net income available to common stockholders/Omega OP Unit holders by the weighted-average number of shares of common stock/Omega OP Units outstanding during the relevant period. Diluted EPS/EPU is computed using the treasury stock method, which is net income divided by the total weighted-average number of common outstanding shares/Omega OP Units plus the effect of dilutive common equivalent shares/units during the respective period. Dilutive common shares/Omega OP Units reflect the assumed issuance of additional common shares pursuant to certain of our share-based compensation plans, including restricted stock and profit interest units, performance restricted stock and profit interest units, the assumed issuance of additional shares related to Omega OP Units held by outside investors. Dilutive Omega OP Units reflect the assumed issuance of additional Omega OP Units pursuant to certain of our share-based compensation plans, including, restricted stock and profit interest units, performance restricted stock and profit interest units. Noncontrolling Interests Noncontrolling interests is the portion of equity not attributable to the respective reporting entity. We present the portion of any equity that we do not own in consolidated entities as noncontrolling interests and classify those interests as a component of total equity, separate from total stockholders’ equity or owners’ equity on our Consolidated Balance Sheets. We include net income attributable to the noncontrolling interests in net income in our Consolidated Statements of Operations. As our ownership of a controlled subsidiary increases or decreases, any difference between the aggregate consideration paid to acquire the noncontrolling interests and our noncontrolling interest balance is recorded as a component of equity in additional paid-in capital, so long as we maintain a controlling ownership interest. The noncontrolling interest for Omega represents the outstanding Omega OP Units held by outside investors and interests in a consolidated real estate joint venture not fully owned by Omega. The noncontrolling interest for Omega OP represents outside investors interests in a consolidated real estate joint venture not fully owned by Omega OP. Foreign Operations The U.S. dollar (“USD”) is the functional currency for our consolidated subsidiaries operating in the U.S. The functional currency for our consolidated subsidiaries operating in the U.K. is the British Pound (“GBP”). For our consolidated subsidiaries whose functional currency is not the USD, we translate their financial statements into the USD. We translate assets and liabilities at the exchange rate in effect as of the financial statement date. Revenue and expense accounts are translated using an average exchange rate for the period. Gains and losses resulting from translation are included in Omega OP’s owners’ equity and Omega’s accumulated other comprehensive loss (“AOCL”), as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interests, if applicable. We and certain of our consolidated subsidiaries may have intercompany and third-party debt that is not denominated in the entity’s functional currency. When the debt is remeasured against the functional currency of the entity, a gain or loss can result. The resulting adjustment is reflected in results of operations, unless it is intercompany debt that is deemed to be long-term in nature in which case the adjustments are included in Omega OP’s owners’ equity and Omega’s AOCL and a proportionate amount of gain or loss is allocated to noncontrolling interests, if applicable. 19 Table of Contents Derivative Instruments Cash flow hedges During our normal course of business, we may use certain types of derivative instruments for the purpose of managing interest rate and currency risk. To qualify for hedge accounting, derivative instruments used for risk management purposes must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions, must be, and are expected to remain, probable of occurring in accordance with our related assertions. Omega recognizes all derivative instruments, including embedded derivatives required to be bifurcated, as assets or liabilities in the Consolidated Balance Sheets at their fair value which is determined using a market approach and Level 2 inputs. Changes in the fair value of derivative instruments that are not designated in hedging relationships or that do not meet the criteria of hedge accounting are recognized in earnings. For derivatives designated in qualifying cash flow hedging relationships, the gain or loss on the derivative is recognized in Omega OP’s owners’ equity and Omega’s AOCL as a separate component of equity and a proportionate amount of gain or loss is allocated to noncontrolling interest, if applicable. We formally document all relationships between hedging instruments and hedged items, as well as our risk-management objectives and strategy for undertaking various hedge transactions. This process includes designating all derivatives that are part of a hedging relationship to specific forecasted transactions as well as recognized liabilities or assets on the Consolidated Balance Sheets. We also assess and document, both at inception of the hedging relationship and on a quarterly basis thereafter, whether the derivatives are highly effective in offsetting the designated risks associated with the respective hedged items. If it is determined that a derivative ceases to be highly effective as a hedge, or that it is probable the underlying forecasted transaction will not occur, we discontinue hedge accounting prospectively and record the appropriate adjustment to earnings based on the current fair value of the derivative. As a matter of policy, we do not use derivatives for trading or speculative purposes. At June 30, 2020 and December 31, 2019, the fair value of certain qualifying cash flow hedges was $ 13.5 million and $ 3.7 million, respectively, and are included in accrued expenses and other liabilities on our Consolidated Balance Sheets. At June 30, 2020, the fair value of certain qualifying cash flow hedges was $ 2.4 million and is included in other assets on our Consolidated Balance Sheets. Net investment hedge We are exposed to fluctuations in the GBP against its functional currency, the USD, relating to its investments in healthcare-related investments located in the U.K. The Company uses a nonderivative, GBP-denominated term loan and line of credit to manage its exposure to fluctuations in the GBP-USD exchange rate. The foreign currency transaction gain or loss on the nonderivative hedging instrument that is designated and qualifies as a net investment hedge is reported in Omega OP’s owners’ equity and Omega’s AOCL in our Consolidated Balance Sheets. 20 Table of Contents Contractual Receivables and Other Receivables and Lease Inducements Contractual receivables relate to the amounts currently owed to us under the terms of our lease and loan agreements. Effective yield interest receivables relate to the difference between the interest income recognized on an effective yield basis over the term of the loan agreement and the interest currently due to us according to the contractual agreement. Straight-line rent receivables relate to the difference between the rental revenue recognized on a straight-line basis and the amounts currently due to us according to the contractual agreement. Lease inducements result from value provided by us to the lessee, at the inception, modification, or renewal of the lease, and are amortized as a reduction of rental revenue over the non-cancellable lease term. We assess the probability of collecting substantially all payments under our leases based on several factors, including, among other things, payment history of the lessee, the financial strength of the lessee and any guarantors, historical operations and operating trends and current and future economic conditions and expectations of performance. If our evaluation of these factors indicates it is probable that we will be unable to collect substantially all rents, we recognize a charge to rental income and limit our rental income to the lesser of lease income on a straight-line basis plus variable rents when they become accruable or cash collected. If we change our conclusion regarding the probability of collecting rent payments required by a lessee, we may recognize an adjustment to rental income in the period we make a change to our prior conclusion. On a quarterly basis, and more frequently as appropriate, we review our contractual interest receivables, effective yield interest receivables and direct financing lease receivables to determine their collectability. The determination of collectability of these assets requires significant judgment and is affected by several factors relating to the credit quality of our operators that we regularly monitor, including (i) payment history, (ii) the age of the contractual receivables, (iii) the current economic conditions and reimbursement environment, (iv) the ability of the tenant to perform under the terms of their lease and/or contractual loan agreements and (v) the value of the underlying collateral of the agreement, if any. 21 Table of Contents For a loan recognized on an effective yield basis or a direct financing lease, we generally provide an allowance for effective interest or income from direct financing leases when certain conditions or indicators of adverse collectability are present. If these accounts receivable balances are subsequently deemed uncollectible, the receivable and allowance for doubtful account balance are written off. A summary of our net receivables by type is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 2019 ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual receivables – net ​ $ 27,579 ​ $ 27,122 ​ ​ ​ ​ ​ ​ ​ ​ ​ Effective yield interest receivables ​ $ 12,768 ​ $ 12,914 ​ Straight-line rent receivables ​ 273,672 ​ 275,549 ​ Lease inducements ​ 116,873 ​ 92,628 ​ Other receivables and lease inducements ​ $ 403,313 ​ $ 381,091 ​ ​ During the first quarter of 2020, we provided approximately $ 16.0 million of funding to four operators, which was accounted for as lease inducements. Of the $ 16.0 million, $ 12.9 million was funded to an operator for development and start-up related costs. ​ During the second quarter of 2020, we provided approximately $ 12.9 million of funding to three operators, which was accounted for as lease inducements. Of the $ 12.9 million, $ 11.0 million was funded to an operator for development and start-up related costs. ​ Reclassification ​ The six months ended June 30, 2019 Consolidated Statements of Changes in Equity and the six months ended June 30, 2019 Consolidated Statements of Changes in Owners’ Equity have been reclassified to conform to current period presentation. ​ Accounting Pronouncements Adopted in 2020 In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 specifically excludes from its scope receivables arising from operating leases accounted for under Topic 842. We adopted ASU 2016-13 on January 1, 2020 using the modified retrospective approach and we recorded an initial $ 28.8 million allowance for expected credit losses with a corresponding adjustment to equity . ​ 22 Table of Contents Transition Impact of Adopting Topic 326 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-adoption balance as of ​ Impact of adopting ​ Post-adoption balance as of Financial Statement Line Item ​ December 31, 2019 ​ Topic 326 ​ January 1, 2020 ​ ​ (in thousands) Mortgage Notes Receivable $ 773,563 $ ( 21,386 ) $ 752,177 Investment in Direct Financing Leases ​ 11,488 ​ ( 611 ) ​ 10,877 Other Investments ​ 419,228 ​ ( 6,688 ) ​ 412,540 Off-Balance Sheet Commitments ​ 20,777 ​ ( 100 ) ​ 20,677 Total $ 1,225,056 $ ( 28,785 ) $ 1,196,271 ​ We elected to disaggregate our financial assets within the scope of Topic 326 based on the type of financial instrument. These segments were further disaggregated based on our internal credit ratings. We assess our internal credit ratings on a quarterly basis. Our internal credit ratings consider several factors including the collateral and/or security, the performance of borrowers underlying facilities, if applicable, available credit support (e.g., guarantees), borrowings with third-parties, and other ancillary business ventures and real estate operations of the borrower. Our internal ratings range between 1 and 7. An internal rating of 1 reflects the lowest likelihood of loss and a 7 reflects the highest likelihood of loss. Amortized Cost Basis By Year of Origination and Credit Quality Indicator ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Rating Financial Statement Line Item 2020 2019 2018 2017 2016 2015 2014 & older Revolving Loans ​ Balance as of June 30, 2020 ​ ​ (in thousands) 1 Mortgage Notes Receivable $ - $ - $ - $ - $ - $ 67,747 $ - $ - ​ $ 67,747 2 Mortgage Notes Receivable ​ 43,150 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ ​ 43,150 3 Mortgage Notes Receivable ​ - ​ - ​ - ​ - ​ - ​ - ​ 35,964 ​ - ​ ​ 35,964 4 Mortgage Notes Receivable ​ 88,259 ​ 12,117 ​ 44,356 ​ 44,431 ​ 35,396 ​ 9,374 ​ 500,821 ​ - ​ ​ 734,754 5 Mortgage Notes Receivable ​ - ​ - ​ 19,000 ​ 754 ​ - ​ - ​ 7,971 ​ - ​ ​ 27,725 6 Mortgage Notes Receivable ​ - ​ - ​ - ​ - ​ - ​ - ​ 6,377 ​ - ​ ​ 6,377 ​ Sub-total ​ 131,409 ​ 12,117 ​ 63,356 ​ 45,185 ​ 35,396 ​ 77,121 ​ 551,133 ​ - ​ ​ 915,717 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3 Investment in Direct Financing Leases ​ - ​ - ​ - ​ - ​ - ​ 11,476 ​ - ​ - ​ ​ 11,476 ​ Sub-total ​ - ​ - ​ - ​ - ​ - ​ 11,476 ​ - ​ - ​ ​ 11,476 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Other Investments ​ 17,556 ​ - ​ - ​ - ​ - ​ - ​ - ​ - ​ ​ 17,556 2 Other Investments ​ - ​ - ​ - ​ - ​ - ​ 2,082 ​ - ​ 27,265 ​ ​ 29,347 3 Other Investments ​ - ​ 23,002 ​ 33,076 ​ - ​ - ​ 411 ​ 4,300 ​ 75,084 ​ ​ 135,873 4 Other Investments ​ 3,500 ​ 14,402 ​ 111,258 ​ - ​ 85,930 ​ - ​ - ​ 5,000 ​ ​ 220,090 5 Other Investments ​ 266 ​ 21,994 ​ 14,361 ​ - ​ - ​ - ​ - ​ - ​ ​ 36,621 ​ Sub-total ​ 21,322 ​ 59,398 ​ 158,695 ​ - ​ 85,930 ​ 2,493 ​ 4,300 ​ 107,349 ​ ​ 439,487 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ $ 152,731 $ 71,515 $ 222,051 $ 45,185 $ 121,326 $ 91,090 $ 555,433 $ 107,349 ​ $ 1,366,680 ​ We have a limited history of incurred losses and consequently have elected to employ external data to perform our expected credit loss calculation. We have elected a probability of default (“PD”) and loss given default (“LGD”) methodology. Our model’s historic inputs consider PD and LGD data for residential care facilities published by the Federal Housing Administration (the “FHA”) along with Standards & Poor’s one-year global corporate default rates. Our historical loss rates revert to historical averages after 36 periods. Our model’s current conditions and supportable forecasts consider internal credit ratings, current and projected U.S. unemployment rates published by the United States Bureau of Labor Statistics and the Federal Reserve Bank of St. Louis and the weighted average life to maturity of the underlying financial asset. 23 Table of Contents Allowance for Credit Loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment ​ Financial Statement Line Item Allowance for Credit Loss at December 31, 2019 Allowance for Credit Loss on January 1, 2020 Provision for Credit Loss for the three months ended June 30, 2020 Provision for Credit Loss for the six months ended June 30, 2020 Allowance for Credit Loss as of June 30, 2020 ​ ​ ​ (in thousands) Segment A-4 ​ Mortgage Notes Receivable $ - $ 19,293 $ 2,704 $ 3,774 $ 23,067 Segment B-3 ​ Mortgage Notes Receivable ​ - ​ 901 ​ ( 106 ) ​ ( 74 ) ​ 827 Segment C-5 ​ Mortgage Notes Receivable ​ - ​ 829 ​ ( 396 ) ​ ( 409 ) ​ 420 Segment E-6 ​ Mortgage Notes Receivable ​ 4,905 ​ 363 ​ ( 93 ) ​ ( 27 ) ​ 5,241 Segment F-2 ​ Mortgage Notes Receivable ​ - ​ - ​ 133 ​ 133 ​ 133 ​ ​ Sub-total ​ 4,905 ​ 21,386 ​ 2,242 ​ 3,397 ​ 29,688 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment A-3 ​ Investment in Direct Financing Leases ​ 217 ​ 611 ​ ( 26 ) ​ ( 5 ) ​ 606 ​ ​ Sub-total ​ 217 ​ 611 ​ ( 26 ) ​ ( 5 ) ​ 606 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment A-4 ​ Other Investments ​ - ​ 3,158 ​ ( 983 ) ​ ( 826 ) ​ 2,332 Segment B-3 ​ Other Investments ​ - ​ 1,434 ​ ( 441 ) ​ ( 412 ) ​ 1,022 Segment C-2 ​ Other Investments ​ - ​ 195 ​ ( 61 ) ​ ( 71 ) ​ 124 Segment D-5 ​ Other Investments ​ - ​ 1,901 ​ ( 705 ) ​ ( 545 ) ​ 1,356 ​ ​ Sub-total ​ - ​ 6,688 ​ ( 2,190 ) ​ ( 1,854 ) ​ 4,834 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Segment A-4 ​ Off-Balance Sheet Commitments ​ - ​ 100 ​ ( 11 ) ​ ( 37 ) ​ 63 ​ ​ Sub-total ​ - ​ 100 ​ ( 11 ) ​ ( 37 ) ​ 63 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ 5,122 $ 28,785 $ 15 $ 1,501 $ 35,191 ​ ​ As of June 30, 2020, $ 13.6 million of contractual interest receivable is recorded in contractual receivables – net on our Consolidated Balance Sheets. No interest receivable has been reserved for during the six month period ended June 30, 2020. We have elected the practical expedient to exclude interest receivable from our allowance for credit losses. We write-off interest receivable to provision for credit losses in the period we determine the interest is no longer considered collectible. On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Inter-bank Offered Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. ​ ​ 24 Table of Contents NOTE 2 – PROPERTIES AND INVESTMENTS Leased Property A summary of our investments in real estate properties subject to operating leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 2019 ​ ​ (in thousands) ​ Buildings ​ $ 6,864,761 ​ $ 7,056,106 ​ Land ​ 883,618 ​ 901,246 ​ Furniture and equipment ​ 520,439 ​ 515,421 ​ Site improvements ​ 305,392 ​ 287,655 ​ Construction in progress ​ 233,734 ​ 225,566 ​ Total real estate investments ​ 8,807,944 ​ 8,985,994 ​ Less accumulated depreciation ​ ( 1,902,587 ) ​ ( 1,787,425 ) ​ Real estate investments – net ​ $ 6,905,357 ​ $ 7,198,569 ​ ​ ​ At June 30, 2020, our leased real estate properties included 766 SNFs, 114 ALFs, 28 specialty facilities and two MOBs. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ ​ Six Months Ended June 30, ​ ​ 2020 ​ 2019 ​ ​ 2020 ​ 2019 ​ ​ (in thousands) Rental income – operating leases ​ $ 217,620 ​ $ 192,026 ​ ​ $ 435,960 ​ $ 380,428 Variable lease income – operating leases ​ ​ 3,912 ​ ​ 2,791 ​ ​ ​ 7,072 ​ ​ 6,566 Total lease income ​ $ 221,532 ​ $ 194,817 ​ ​ $ 443,032 ​ $ 386,994 ​ The following tables summarize the significant asset acquisitions that occurred during the first six months of 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ Total ​ ​ ​ ​ Building & Site ​ Furniture ​ Initial ​ ​ Facilities Country/ Investment Land Improvements & Equipment Annual ​ Period ​ SNF ALF Specialty MOB ​ State ​ (in millions) ​ Cash Yield (1) ​ Q1 — 2 — — UK ​ $ 12.1 ​ $ 3.6 $ 8.0 $ 0.5 8.00 % Q1 ​ 1 — — — ​ IN ​ ​ 7.0 ​ ​ 0.7 ​ ​ 5.8 ​ ​ 0.5 ​ 9.50 % Q2 ​ 1 — — — ​ OH ​ ​ 6.9 ​ ​ 0.8 ​ ​ 5.5 ​ ​ 0.6 ​ 9.50 % Total 2 2 — — ​ $ 26.0 $ 5.1 $ 19.3 $ 1.6 ​ ​ (1) The initial annual cash yield reflects the initial annual cash rent divided by the purchase price. ​ MedEquities Merger ​ On May 17, 2019, Omega and Omega OP completed their merger with MedEquities Realty Trust, Inc. (“MedEquities”) and its subsidiary operating partnership and the general partner of its subsidiary operating partnership. Pursuant to the Agreement and Plan of Merger, as amended by the First Amendment to the Agreement and Plan of Merger, dated March 26, 2019, (the “Merger Agreement”) Omega acquired MedEquities and MedEquities was merged with and into Omega (the “Merger”) at the effective time of the Merger with Omega continuing as the surviving company. 25 Table of Contents In accordance with the Merger Agreement, each share of MedEquities common stock issued and outstanding immediately prior thereto was converted into the right to receive (i) 0.235 of a share of Omega common stock plus the right to receive cash in lieu of any fractional shares of Omega common stock, and (ii) an amount in cash equal to $ 2.00 (the “Cash Consideration”). In connection with the MedEquities Merger, we issued approximately 7.5 million shares of Omega common stock and paid approximately $ 63.7 million of cash consideration to former MedEquities stockholders. We borrowed approximately $ 350 million under our existing senior unsecured revolving credit facility to fund the cash consideration and the repayment of MedEquities’ previously outstanding debt. As a result of the MedEquities Merger, we acquired 33 facilities subject to operating leases, four mortgages, three other investments and an investment in an unconsolidated joint venture. We also acquired other assets and assumed debt and other liabilities. Based on the closing price of our common stock on May 16, 2019, the fair value of the consideration exchanged approximated $ 346 million. ​ Our purchase price allocation was finalized during the second quarter of 2020, with no material adjustments recorded. The following table highlights the final fair value of the assets acquired and liabilities assumed on May 17, 2019: ​ ​ ​ ​ ​ ​ (in thousands) Fair value of net assets acquired: ​ ​ ​ Real estate investments ​ $ 440,690 Mortgage notes receivable ​ 108,097 Other investments ​ 19,192 Investment in unconsolidated joint venture ​ 73,834 Cash ​ 4,067 Contractual receivables ​ 1,002 Other assets (1) ​ 7,698 Total investments ​ ​ 654,580 Debt ​ ​ ( 285,100 ) Accrued expenses and other liabilities (2) ​ ​ ( 23,931 ) Fair value of net assets acquired ​ $ 345,549 (1) Includes approximately $ 2.5 million in above market lease assets. (2) Includes approximately $ 1.1 million in below market lease liabilities. ​ The MedEquities facilities acquired in 2019 are included in our results of operations from the date of acquisition. For the three and six months ended June 30, 2020, we recognized approximately $ 13 million and $ 26 million, respectively of total revenue from the assets acquired in connection with the MedEquities Merger. ​ 26 Table of Contents Pro Forma Acquisition Results ​ The following unaudited pro forma information presents consolidated financial information as if the MedEquities Merger occurred on January 1, 2019. In the opinion of management, all significant necessary adjustments to reflect the effect of the merger have been made. The following pro forma information is not indicative of future operations. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pro Forma ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, ​ June 30, ​ ​ 2020 ​ ​ 2019 ​ 2020 ​ ​ 2019 ​ ​ ​ (in thousands, except per share amounts, unaudited) ​ ​ ​ ​ ​ ​ Pro forma revenues ​ $ 256,395 ​ $ 232,492 ​ $ 509,419 ​ $ 470,455 Pro forma net income ​ $ 101,960 ​ $ 79,107 ​ $ 194,239 ​ $ 158,126 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share – diluted: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income – as reported ​ $ 0.43 ​ $ 0.34 ​ $ 0.83 ​ $ 0.68 Net income – pro forma ​ $ 0.43 ​ $ 0.35 ​ $ 0.83 ​ $ 0.71 ​ Asset Sales and Impairments ​ During the first quarter of 2020, we sold six facilities subject to operating leases for approximately $ 18.1 million in net cash proceeds recognizing a net gain of approximately $ 1.8 million. In addition, we recorded impairments on three facilities of approximately $ 3.6 million ( one was subsequently reclassified to assets held for sale). During the second quarter of 2020, we sold 15 facilities subject to operating leases and one facility subject to a direct financing lease for approximately $ 38.0 million in net cash proceeds recognizing a net gain of approximately $ 12.8 million. In addition, we recorded impairments on 10 facilities of approximately $ 12.0 million ( two were subsequently reclassified to assets held for sale). Our recorded impairments were primarily the result of decisions to exit certain non-strategic facilities and/or operators. We reduced the net book value of the impaired facilities to their estimated fair values or, with respect to the facilities reclassified to held for sale, to their estimated fair values less costs to sell. To estimate the fair value of the facilities, we utilized a market approach which considered binding sale agreements (a Level 1 input) and/or non-binding offers from unrelated third parties and/or broker quotes (a Level 3 input). ​ NOTE 3 – DIRECT FINANCING LEASES The components of investments in direct financing leases consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 2019 ​ ​ (in thousands) ​ Minimum lease payments receivable ​ $ 26,481 ​ $ 27,227 ​ Less unearned income ​ ( 15,005 ) ​ ( 15,522 ) ​ Investment in direct financing leases ​ 11,476 ​ 11,705 ​ Less allowance for credit losses on direct financing leases ​ ( 606 ) ​ ( 217 ) ​ Investment in direct financing leases – net ​ $ 10,870 ​ $ 11,488 ​ ​ ​ ​ ​ ​ ​ ​ ​ Properties subject to direct financing leases ​ 1 ​ 2 ​ Number of direct financing leases ​ 1 ​ 2 ​ ​ 27 Table of Contents In June 2020, we received approximately $ 14.9 million from the Orianna Health Systems Distribution Trust (the “Trust”) as part of its final liquidation. As of December 31, 2019, our remaining receivable was approximately $ 14.1 million which was recorded in other assets on our Consolidated Balance Sheets. Approximately $ 0.8 million of the overall proceeds were recorded in recovery (impairment) of direct financing leases on our Consolidated Statements of Operations for the three and six months ended June 30, 2020. ​ In March 2019, we received updated information from the Trust indicating diminished collectability of the accounts receivable owed to us. As a result, we recorded an additional $ 7.7 million allowance during the three months ended March 31, 2019. ​ ​ ​ NOTE 4 – MORTGAGE NOTES RECEIVABLE As of June 30, 2020, mortgage notes receivable relate to ten fixed rate mortgage notes on 64 facilities. The mortgage notes are secured by first mortgage liens on the borrowers’ underlying real estate and personal property. The mortgage notes receivable relate to facilities located in eight states that are operated by seven independent healthcare operating companies. We monitor compliance with the terms of our mortgages and when necessary have initiated collection, foreclosure and other proceedings with respect to certain outstanding mortgage notes. ​ The principal amounts outstanding of mortgage notes receivable, net of allowances, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 2019 ​ ​ (in thousands) ​ Mortgage note due 2027; interest at 10.59 % ​ $ 112,500 ​ $ 112,500 ​ Mortgage notes due 2029; interest at 10.37 % (1) ​ 665,403 ​ 526,520 ​ Other mortgage notes outstanding (2) ​ 137,814 ​ 139,448 ​ Mortgage notes receivable, gross ​ 915,717 ​ 778,468 ​ Allowance for credit losses on mortgage notes receivable ​ ( 29,688 ) ​ ( 4,905 ) ​ Total mortgages — net ​ $ 886,029 ​ $ 773,563 ​ (1) Approximates the weighted average interest rate on 47 facilities as of June 30, 2020. Two notes totaling approximately $ 23.6 million are construction mortgages with maturities in 2021. Two mortgages notes totaling $ 43.1 million mature in 2021 and the remaining loan balance matures in 2029 . (2) Other mortgages outstanding have a weighted average interest rate of 9.47 % per annum as of June 30, 2020 and maturity dates through 2028 . ​ ​ $ 665 Million Mortgage Notes due 2029 On May 1, 2020, we amended our initial $ 415 million amortizing master mortgage (the “Master Mortgage”) with Ciena Healthcare (“Ciena”) to (i) increase the interest rate on the Master Mortgage to 10.67 % per annum and (ii) add an additional $ 83.5 million mortgage note related to eight SNFs and one ALF located in Michigan. These nine facilities were formerly leased to Ciena and were sold to Ciena in a noncash transaction that closed on May 1, 2020 and we retained the first mortgage. In connection with this sale, we recorded a loss of $ 3.6 million related to the write-off of the nine facilities’ straight-line rent receivable. The mortgage note matures on June 30, 2029 and bears an initial annual interest rate of 10.31 % which increases each year by 2 %. As of June 30, 2020, the outstanding principal balance of this mortgage note is approximately $ 83.4 million. In June 2020, we entered into a loan agreement with subsidiaries of Ciena to provide $ 43.2 million of mortgage notes related to two SNFs located in Ohio. The mortgage notes mature on June 30, 2021 and bear an initial annual interest rate of 9.5 %. As of June 30, 2020, the outstanding principal balance of these mortgage notes is approximately $ 43.2 million. As of June 30, 2020, our total outstanding mortgages notes receivable with Ciena total $ 665.4 million. 28 Table of Contents ​ ​ ​ ​ NOTE 5 – OTHER INVESTMENTS A summary of our other investments is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 2019 ​ ​ ​ (in thousands) ​ Other investment notes due 2021 ; interest at 13.11 % (1) ​ $ 80,294 $ 77,087 ​ Other investment notes due 2021 - 2025 ; interest at 8.25 % (1) ​ ​ 62,187 ​ 58,687 ​ Other investment note due 2023 ; interest at 12.00 % ​ 52,343 ​ ​ 52,213 ​ Other investment notes due 2023 ; interest at 7.32 % (1) ​ 65,000 ​ 65,000 ​ Other investment notes outstanding (2) ​ 179,663 ​ 166,241 ​ Total other investments, gross ​ ​ 439,487 ​ ​ 419,228 ​ Allowance for credit losses on other investments ​ ​ ( 4,834 ) ​ ​ — ​ Total other investments - net ​ $ 434,653 ​ $ 419,228 ​ (1) Approximate weighted average interest rate as of June 30, 2020. (2) Other investment notes have a weighted average interest rate of 7.96 % as of June 30, 2020 and maturity dates through 2028 . ​ ​ Other Investment Notes due 2021-2025 ​ On February 28, 2020, we provided an affiliate of Agemo Holdings LLC (“Agemo”) a $ 3.5 million term loan bearing interest at a fixed rate of 10 % per annum and maturing on February 28, 2021 . As of June 30, 2020, $ 3.5 million is outstanding on this term loan. Our total loans outstanding with Agemo and its affiliates at June 30, 2020 approximate $ 62.2 million. ​ Other Investment Notes Outstanding ​ On April 17, 2020, we provided a $ 17.6 million unsecured loan to a subsidiary of Second Spring Healthcare Investments (an entity in which we have an approximate 15 % ownership interest, see Note 7 – Investment in Joint Ventures). The loan bears interest at the greater of the prime interest rate or 3-month LIBOR plus 2.75 % per annum and is due on demand. As of June 30, 2020, the loan bears interest at 3.25 % per annum and has a total outstanding balance of $ 17.6 million. ​ ​ ​ ​ ​ ​ ​ 29 Table of Contents NOTE 6 – VARIABLE INTEREST ENTITIES As of June 30, 2020 and December 31, 2019, Agemo is a VIE. Below is a summary of our assets and collateral associated with this operator as of June 30, 2020 and December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ ​ 2020 ​ 2019 ​ ​ ​ (in thousands) ​ Assets ​ ​ ​ ​ ​ ​ ​ Real estate investments – net ​ $ 380,115 ​ $ 403,389 ​ Other investments ​ 62,187 ​ ​ 58,687 ​ Contractual receivables ​ 18,170 ​ ​ 18,113 ​ Straight-line rent receivables ​ 50,537 ​ ​ 46,247 ​ Lease inducement ​ ​ 9,469 ​ ​ 6,810 ​ Subtotal ​ 520,478 ​ ​ 533,246 ​ ​ ​ ​ ​ ​ ​ ​ ​ Collateral ​ ​ ​ ​ Letters of credit ​ ( 9,253 ) ​ ​ ( 9,253 ) ​ Personal guarantee ​ ( 8,000 ) ​ ​ ( 8,000 ) ​ Other collateral ​ ( 380,115 ) ​ ​ ( 403,389 ) ​ Subtotal ​ ( 397,368 ) ​ ​ ( 420,642 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum exposure to loss ​ $ 123,110 ​ $ 112,604 ​ ​ In determining our maximum exposure to loss from the VIE, we considered the underlying value of the real estate subject to leases with the operator and other collateral, if any, supporting our other investments, which may include accounts receivable, security deposits, letters of credit or personal guarantees, if any. See Note 5 – Other Investments regarding the terms of the other investments with Agemo and Note 16 – Commitments and Contingencies, regarding our commitment to provide capital expenditure funding to our operators which includes Agemo. In May 2018, we reached an out-of-court restructuring agreement with Agemo that provided for the deferral of rent, the extension of the maturity of our lease and loans, and a working capital loan. If Agemo is unable to meet their contractual obligations to us, we may be required to account for rental income from them on a cash basis and reserve approximately $ 78.2 million of contractual receivables, straight-line rent receivables and lease inducements. The table below reflects our total revenues from Agemo for the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30 ​ ​ Six Months Ended June 30, ​ ​ ​ 2020 ​ 2019 ​ ​ 2020 ​ 2019 ​ ​ ​ (in thousands) Revenue ​ ​ ​ ​ ​ ​ Rental income ​ ​ $ 14,814 ​ $ 15,558 ​ ​ $ 30,101 ​ $ 30,329 Other investment income ​ ​ 1,297 ​ 1,093 ​ ​ 2,538 ​ 2,127 Total (1) ​ ​ $ 16,111 ​ $ 16,651 ​ ​ $ 32,639 ​ $ 32,456 (1) For the three months ended June 30, 2020 and 2019, we received cash from Agemo of approximately $ 13.1 million and $ 13.2 million, respectively, pursuant to our lease and other investment agreements. For the six months ended June 30, 2020 and 2019, we received cash from Agemo of approximately $ 26.8 million and $ 26.2 million, respectively, pursuant to our lease and other investment agreements. ​ ​ ​ ​ ​ 30 Table of Contents NOTE 7 – INVESTMENTS IN JOINT VENTURES Unconsolidated Joint Ventures Omega owns an interest in the following entities that are accounted for under the equity method (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Amount ​ ​ Ownership ​ Initial Investment ​ ​ Initial ​ Facility ​ Facilities at ​ June 30, ​ December 31, Entity (1) ​ % ​ Date ​ ​ Investment (2) ​ Type ​ 6/30/2020 ​ 2020 2019 Second Spring Healthcare Investments (3) ​ 15 % ​ 11/1/2016 ​ $ 50,032 ​ SNF ​ 31 ​ $ 23,795 $ 22,504 Lakeway Realty, L.L.C. ​ 51 % ​ 5/17/2019 ​ ​ 73,834 ​ Specialty facility ​ 1 ​ ​ 72,791 ​ ​ 73,273 Cindat Joint Venture ​ 49 % ​ 12/18/2019 ​ ​ 105,585 ​ ALF ​ 67 ​ ​ 98,766 ​ ​ 103,976 OMG Senior Housing, LLC ​ 50 % ​ 12/6/2019 ​ ​ — ​ ILF ​ 1 ​ — ​ — OH CHS SNP, Inc. ​ 9 % ​ 12/20/2019 ​ ​ 348 ​ N/A ​ N/A ​ ​ 194 ​ ​ 131 ​ ​ ​ ​ ​ ​ $ 229,799 ​ ​ ​ ​ ​ $ 195,546 ​ $ 199,884 (1) These entities and their subsidiaries are not consolidated by the Company because it does not control, through voting rights or other means, the joint venture. (2) Our initial investment includes our transaction costs, if any. (3) The Company made a loan of $ 17.6 million to the venture which is included in other investments. See Note 5 – Other Investments. ​ The following table reflects our income (loss) from unconsolidated joint ventures for the three and six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, Entity ​ 2020 2019 ​ 2020 2019 ​ ​ (in thousands) Second Spring Healthcare Investments ​ $ 712 ​ $ 650 ​ $ 1,281 ​ $ 1,307 Lakeway Realty, L.L.C. ​ ​ 613 ​ 293 ​ ​ 1,223 ​ 293 Cindat Joint Venture ​ 244 ​ — ​ 891 ​ — OMG Senior Housing, LLC ​ ( 118 ) ​ — ​ ( 279 ) ​ — OH CHS SNP, Inc. ​ ( 49 ) ​ — ​ ( 154 ) ​ — Total ​ $ 1,402 ​ $ 943 ​ $ 2,962 ​ $ 1,600 31 Table of Contents ​ Asset Management Fees We receive asset management fees from certain joint ventures for services provided. For the three months ended June 30, 2020 and 2019, we recognized approximately $ 0.5 million and $ 0.3 million, respectively of asset management fees. For the six months ended June 30, 2020 and 2019, we recognized approximately $ 0.7 million and $ 0.5 million, respectively of asset management fees. These fees are included in miscellaneous income in the accompanying Consolidated Statements of Operations. NOTE 8 – ASSETS HELD FOR SALE The following is a summary of our assets held for sale: ​ ​ ​ ​ ​ ​ ​ Properties Held For Sale ​ Number of Net Book Value ​ ​ Properties ​ (in thousands) December 31, 2019 6 ​ $ 4,922 Properties sold (1) ( 4 ) ​ ​ ( 4,341 ) Properties added (2) 6 ​ ​ 23,544 March 31, 2020 8 ​ $ 24,125 Properties sold (1) ( 5 ) ​ ​ ( 19,910 ) Properties added (2) 3 ​ ​ 66,301 June 30, 2020 (3) 6 ​ ​ 70,516 (1) In the first quarter of 2020, we sold four facilities for approximately $ 4.2 million in net cash proceeds recognizing a net loss on sale of approximately $ 0.5 million. In the second quarter of 2020, we sold five facilities for approximately $ 38.4 million in net cash proceeds recognizing a net gain on sale of approximately $ 16.7 million. (2) In the first quarter of 2020, we recorded approximately $ 1.9 million of impairment expense to reduce one facility’s book value to its estimated fair value less costs to sell before it was reclassified to assets held for sale. In the second quarter of 2020, we recorded approximately $ 2.6 million of impairment expense to reduce two facilities’ book value to their estimated fair value less costs to sell before they were reclassified to assets held for sale. (3) We plan to sell the facilities classified as assets held for sale at June 30, 2020 within the next twelve months. ​ NOTE 9 – INTANGIBLES The following is a summary of our intangibles as of June 30, 2020 and December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ ​ 2020 ​ 2019 ​ ​ ​ (in thousands) ​ Assets: ​ ​ ​ ​ Goodwill ​ $ 643,491 ​ $ 644,415 ​ ​ ​ ​ ​ ​ ​ ​ ​ Above market leases ​ $ 24,920 ​ $ 49,240 ​ Accumulated amortization ​ ( 20,346 ) ( 21,227 ) ​ Net intangible assets ​ $ 4,574 ​ $ 28,013 ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ Below market leases ​ $ 140,884 ​ $ 147,292 ​ Accumulated amortization ​ ( 91,070 ) ( 87,154 ) ​ Net intangible liabilities ​ $ 49,814 ​ $ 60,138 ​ ​ 32 Table of Contents Above market leases, net of accumulated amortization, are included in other assets on our Consolidated Balance Sheets. Below market leases, net of accumulated amortization, are included in accrued expenses and other liabilities on our Consolidated Balance Sheets. The net amortization related to the above and below market leases is included in our Consolidated Statements of Operations as an adjustment to rental income. For the three months ended June 30, 2020 and 2019, our net amortization related to intangibles was $ 3.5 million and $ 1.6 million, respectively. For the six months ended June 30, 2020 and 2019, our net amortization related to intangibles was $ 4.8 million and $ 3.4 million, respectively. The estimated net amortization related to these intangibles for the remainder of 2020 and the subsequent four years is as follows: remainder of 2020 – $ 3.1 million; 2021 – $ 6.2 million; 2022 – $ 5.9 million; 2023 – $ 5.7 million and 2024 – $ 5.6 million. As of June 30, 2020, the weighted average remaining amortization period of above market lease assets is eight years and below market lease liabilities is approximately eight years . The following is a summary of our goodwill as of June 30, 2020: ​ ​ ​ ​ ​ (in thousands) Balance as of December 31, 2019 ​ $ 644,415 Less: foreign currency translation ​ ( 924 ) Balance as of June 30, 2020 ​ $ 643,491 ​ ​ NOTE 10 – CONCENTRATION OF RISK As of June 30, 2020, our portfolio of real estate investments consisted of 981 healthcare facilities, located in 40 states and the U.K. and operated by 69 third-party operators. Our investment in these facilities, net of impairments and allowances, totaled approximately $ 9.8 billion at June 30, 2020, with approximately 97 % of our real estate investments related to healthcare facilities. Our portfolio is made up of 767 SNFs, 114 ALFs, 28 specialty facilities, two medical office buildings, fixed rate mortgages on 57 SNFs, three ALFs and four specialty facilities and six facilities that are held for sale. At June 30, 2020, we also held other investments of approximately $ 434.7 million, consisting primarily of secured loans to third-party operators of our facilities and $ 195.5 million of investments in five unconsolidated joint ventures. At June 30, 2020 we had investments with one operator/or manager that exceeded 10% of our total investments: Ciena Healthcare (“Ciena”). Ciena also generated approximately 10 % of our total revenues for the three and six months ended June 30, 2020. Ciena generated approximately 11 % of our total revenues for the three and six months ended June 30, 2019. At June 30, 2020, the three states in which we had our highest concentration of investments were Florida ( 14 %), Texas ( 9 %) and Michigan ( 7 %). ​ NOTE 11 – STOCKHOLDERS’/OWNERS’ EQUITY $ 200 Million Stock Repurchase Program On March 20, 2020, Omega’s Board of Directors authorized the repurchase of up to $ 200 million of its outstanding common stock from time to time over the twelve months ending March 20, 2021. We are authorized to repurchase shares of our common stock in open market and privately negotiated transactions or in any other manner as determined by Omega’s management and in accordance with applicable law. The timing and amount of stock repurchases will be determined, in management’s discretion, based on a variety of factors, including but not limited to market conditions, other capital management needs and opportunities, and corporate and regulatory considerations. Omega has no obligation to repurchase any amount of its common stock, and such repurchases, if any, may be discontinued at any time. Omega did no t repurchase any of its outstanding common stock during the six months ended June 30, 2020. ​ ​ ​ ​ 33 Table of Contents Dividends ​ The Board of Directors has declared common stock dividends as set forth below: ​ ​ ​ ​ ​ ​ Record ​ Payment ​ Dividend per Date Date Common Share January 31, 2020 ​ February 14, 2020 ​ $ 0.67 April 30, 2020 ​ May 15, 2020 ​ $ 0.67 July 31, 2020 ​ August 14, 2020 ​ $ 0.67 ​ On the same dates listed above, Omega OP Unit holders received the same distributions per unit as those paid to the common stockholders of Omega. $ 500 Million Equity Shelf Program For the three months ended June 30, 2020, no shares were issued under our $ 500 Million Equity Shelf Program. For the three months ended June 30, 2019, we issued approximately 0.7 million shares of our common stock at an average price of $ 35.90 per share, net of issuance costs, generating net proceeds of $ 26.3 million under our $ 500 Million Equity Shelf Program. For the six months ended June 30, 2020 and 2019, we issued approximately 49 thousand and 3.0 million, respectively, shares of our common stock at an average price of $ 36.18 per share and $ 34.82 per share, respectively, net of issuance costs, generating net proceeds of $ 1.8 million and $ 102.9 million, respectively, under our $ 500 Million Equity Shelf Program. Dividend Reinvestment and Common Stock Purchase Plan On March 23, 2020, we announced that we suspended our Dividend Reinvestment and Common Stock Purchase Plan. For the three months ended June 30, 2020, no shares were issued under our Dividend Reinvestment and Common Stock Purchase Plan. For the three months ended June 30, 2019, we issued approximately 0.6 million shares of our common stock at an average price of $ 37.02 per share through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $ 21.8 million. For the six months ended June 30, 2020 and 2019, we issued approximately 90 thousand and 1.5 million, respectively, shares of our common stock at an average price of $ 41.80 per share and $ 36.52 per share, respectively, through our Dividend Reinvestment and Common Stock Purchase Plan for gross proceeds of approximately $ 3.7 million and $ 54.1 million, respectively. 34 Table of Contents Accumulated Other Comprehensive Loss The following is a summary of our accumulated other comprehensive loss, net of tax where applicable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and for the As of and for the ​ ​ ​ Three Months Ended ​ Six Months Ended ​ ​ ​ June 30, ​ June 30, ​ ​ 2020 2019 2020 2019 ​ ​ (in thousands) ​ Foreign Currency Translation: ​ ​ ​ ​ ​ ​ Beginning balance ​ $ ( 67,058 ) ​ $ ( 40,909 ) ​ $ ( 35,100 ) ​ $ ( 47,704 ) ​ Translation loss ​ ( 1,738 ) ​ ( 8,611 ) ​ ( 33,626 ) ​ ( 1,842 ) ​ Realized gain (loss) ​ 1 ​ ( 195 ) ​ ( 69 ) ​ ( 169 ) ​ Ending balance ​ ( 68,795 ) ​ ( 49,715 ) ​ ( 68,795 ) ​ ( 49,715 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative Instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flow hedges: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ ( 10,213 ) ​ 1,291 ​ ( 2,369 ) ​ 3,994 ​ Unrealized gain (loss) ​ 1,704 ​ ( 5,728 ) ​ ( 5,823 ) ​ ( 8,739 ) ​ Realized (loss) gain (1) ​ ( 1,190 ) ​ ​ 344 ​ ( 1,507 ) ​ ​ 652 ​ Ending balance ​ ( 9,699 ) ​ ( 4,093 ) ​ ( 9,699 ) ​ ( 4,093 ) ​ Net investment hedge: ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ 8,767 ​ ( 2,250 ) ​ ( 4,420 ) ​ 70 ​ Unrealized gain ​ 766 ​ 3,040 ​ 13,953 ​ 720 ​ Ending balance ​ 9,533 ​ 790 ​ 9,533 ​ 790 ​ Total accumulated other comprehensive loss for Omega OP (2) ​ ( 68,961 ) ​ ( 53,018 ) ​ ( 68,961 ) ​ ( 53,018 ) ​ Add: portion included in noncontrolling interest ​ 2,726 ​ 2,299 ​ 2,726 ​ 2,299 ​ Total accumulated other comprehensive loss for Omega ​ $ ( 66,235 ) ​ $ ( 50,719 ) ​ $ ( 66,235 ) ​ $ ( 50,719 ) ​ (1) Recorded in interest expense on the Consolidated Statements of Operations. (2) These amounts are included in Owners’ Equity. ​ ​ NOTE 12 – TAXES Omega is a REIT for United States federal income tax purposes, and Omega OP is a pass through entity for United States federal income tax purposes. Since our inception, Omega has elected to be taxed as a REIT under the applicable provisions of the Internal Revenue Code (“Code”). A REIT is generally not subject to federal income tax on that portion of its REIT taxable income which is distributed to its stockholders, provided that at least 90 % of such taxable income is distributed each tax year and certain other requirements are met, including asset and income tests. So long as we qualify as a REIT under the Code, we generally will not be subject to federal income taxes on the REIT taxable income that we distribute to stockholders, subject to certain exceptions. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income taxes on its taxable income at regular corporate rates and dividends paid to our stockholders will not be deductible by us in computing taxable income. Further, we would not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied, unless the Internal Revenue Service grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect our net income; however, we believe we are organized and operate in such a manner as to qualify for treatment as a REIT. We test our compliance within the REIT taxation rules to ensure that we are in compliance with the REIT rules on a quarterly and annual basis. We review our distributions and projected distributions each year to ensure we have met and will continue to meet the annual REIT distribution requirements. In 2020, we expect to pay dividends in excess of our taxable income. 35 Table of Contents Subject to the limitation under the REIT asset test rules, we are permitted to own up to 100 % of the stock of one or more taxable REIT subsidiaries (“TRSs”). We have elected for certain of our active subsidiaries to be treated as TRSs. Our domestic TRSs are subject to federal, state and local income taxes at the applicable corporate rates. Our foreign TSRs are subject to foreign income taxes. As of June 30, 2020, one of our TRSs that is subject to federal, state and local income taxes at the applicable corporate rates had a net operating loss carry-forward of approximately $ 5.7 million. Up to 100 % of the net operating loss carry-forwards arising in taxable years ending prior to January 1, 2018, may be used to reduce taxable income for any taxable year during the eligible carry-forward period. Changes made by the Tax Cuts and Jobs Act of 2017 (the “2017 Act”) limited the amount of net operating loss (“NOL”) carry-forward arising in tax years ending subsequent to December 31, 2018, to reduce 80 % of taxable income for any taxable year during the eligible carry-forward period. Our NOL carry-forward was fully reserved as of June 30, 2020, with a valuation allowance due to uncertainties regarding realization. Under current law, our NOL carryforwards generated up through December 31, 2017 may be carried forward for no more than 20 years, and our net operating loss carryforward generated in our taxable years ended December 31, 2019 and December 31, 2018 may be carried forward indefinitely. However, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) modified the NOL carryback rules and deferred the application for the NOL carry-forward rules. ​ The CARES Act signed into law on March 27, 2020 modified the NOL carryforward rules applicable to certain of the NOL carryforwards possessed by our TRSs. First, the CARES Act defers the application of 80% of taxable income limitation, which was added to the Code by the 2017 Act, to our TRSs until their taxable years ended December 31, 2021, in addition to modifying the computation of the 80% limitation. Additionally, the CARES Act permits the carryback of NOLs generated by our TRSs in 2018, 2019, and 2020 for up to five years to offset taxable income reported in any of those prior tax years and recover income taxes paid in such prior tax years. Other provisions of the CARES Act may also impact the computation of taxable income by any of our TRSs or Omega and Omega OP. The modifications to the NOL carryback rules do not permit the carryback of a NOL by a REIT and, thus, will not impact Omega. We do not anticipate that such changes will materially impact the computation of Omega’s taxable income, or the taxable income of any Omega entity, including our TRSs. We also do not expect that Omega or any Omega entity, including our TRSs, will realize a material tax benefit as a result of the changes to the provisions of the Code made by the CARES Act. ​ For the three months ended June 30, 2020 and 2019, we recorded approximately $ 0.2 million and $ 0.3 million, respectively, of state and local income tax provisions. For the six months ended June 30, 2020 and 2019, we recorded approximately $ 0.6 million and $ 0.4 million, respectively, of state and local income tax provisions. For the three months ended June 30, 2020 and 2019, we recorded approximately $ 0.7 million and $ 0.5 million, respectively, of tax provisions for foreign income taxes. For the six months ended June 30, 2020 and 2019, we recorded approximately $ 1.3 million and $ 1.1 million, respectively, of tax provisions for foreign income taxes. The expenses were included in income tax expense on our Consolidated Statements of Operations. ​ NOTE 13 – STOCK-BASED COMPENSATION The following is a summary of our stock-based compensation expense for the three and six months ended June 30, 2020 and 2019, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Six Months Ended ​ June 30, June 30, ​ 2020 2019 2020 2019 ​ (in thousands) Stock-based compensation expense $ 4,623 $ 4,040 $ 9,258 $ 8,110 ​ ​ ​ 36 Table of Contents Time Based Restricted Equity Awards Restricted stock, restricted stock units (“RSUs”) and profits interest units (“PIUs”) are subject to forfeiture if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying terminations of service or a change in control of the Company. Prior to vesting, ownership of the shares/units cannot be transferred. The restricted stock has the same dividend and voting rights as our common stock. RSUs accrue dividend equivalents but have no voting rights. PIUs accrue distributions, which are equivalent to dividend equivalents, but have no voting rights. Once vested, each RSU is settled by the issuance of one share of Omega common stock and each PIU is settled by the issuance of one partnership unit in Omega OP (“Omega OP Unit”), subject to certain conditions. Restricted stock and RSUs are valued at the price of our common stock on the date of grant. The PIUs are valued using a Monte Carlo model to estimate fair value. We expense the cost of these awards ratably over their vesting period. We awarded 20,215 RSUs and 102,565 profit interest units to employees on January 1, 2020. Performance-Based Restricted Equity Awards Performance-based restricted equity awards include performance restricted stock units (“PRSUs”) and PIUs. PRSUs and PIUs are subject to forfeiture if the performance requirements are not achieved or if the holder’s service to us terminates prior to vesting, subject to certain exceptions for certain qualifying terminations of employment or a change in control of the Company. The PRSUs awarded in March 2016, January 2017, January 2018, and January 2019 and the PIUs awarded in March 2016, January 2017, January 2018, January 2019 and January 2020 have varying degrees of performance requirements to achieve vesting, and each PRSU and PIU award represents the right to a variable number of shares of common stock or partnership units. Each PIU once earned is convertible into one Omega OP Unit in Omega OP, subject to certain conditions. The vesting requirements are based on either the (i) total shareholder return (“TSR”) of Omega or (ii) Omega’s TSR relative to other real estate investment trusts in the FTSE NAREIT Equity Health Care Index for awards granted in or after 2016 (both “Relative TSR”). We expense the cost of these awards ratably over their service period. Prior to vesting and the distribution of shares or Omega OP Units, ownership of the PRSUs or PIUs cannot be transferred. Dividends on the PRSUs are accrued and only paid to the extent the applicable performance requirements are met. While each PIU is unearned, the employee receives a partnership distribution equal to 10 % of the quarterly approved regular periodic distributions per Omega OP Unit. The remaining partnership distributions (which in the case of normal periodic distributions is equal to the total approved quarterly dividend on Omega’s common stock) on the PIUs accumulate, and if the PIUs are earned, the accumulated distributions are paid. We used a Monte Carlo model to estimate the fair value for the PRSUs and PIUs granted to the employees. The number of shares or units earned under the TSR PRSUs or PIUs depends generally on the level of achievement of Omega’s TSR over the indicated performance period. We awarded 680,038 TSR PIUs to employees on January 1, 2020. The number of shares or units earned under the Relative TSR PRSUs or PIUs depends generally on the level of achievement of Omega’s TSR relative to other real estate investment trusts in the FTSE NAREIT Equity Health Care Index TSR over the performance period indicated. We awarded 528,499 Relative TSR PIUs to employees on January 1, 2020. ​ ​ ​ 37 Table of Contents NOTE 14 – BORROWING ACTIVITIES AND ARRANGEMENTS The following is a summary of our borrowings: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Annual ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ as of ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ June 30, ​ December 31, ​ ​ Maturity 2020 2020 2019 ​ ​ ​ ​ (in thousands) ​ Secured borrowings: ​ ​ ​ HUD mortgages (1)(5) ​ 2046 - 2052 ​ 3.01 % $ 383,701 ​ $ 387,405 ​ Term loan (2)(5) 2021 3.25 % ​ 2,275 ​ ​ 2,275 ​ ​ ​ ​ ​ ​ ​ ​ 385,976 ​ ​ 389,680 ​ Unsecured borrowings: ​ ​ ​ Revolving line of credit (3) 2021 1.39 % 216,434 ​ 125,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. term loan 2022 1.63 % 350,000 ​ 350,000 ​ Sterling term loan (4) 2022 1.54 % 123,560 ​ 132,480 ​ Omega OP term loan (5) 2022 3.29 % 75,000 ​ 75,000 ​ 2015 term loan 2022 3.80 % 250,000 ​ 250,000 ​ Deferred financing costs – net (6) ​ ( 2,211 ) ​ ( 2,742 ) ​ Total term loans – net ​ 796,349 ​ 804,738 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 notes 2023 4.375 % 700,000 ​ 700,000 ​ 2024 notes 2024 4.950 % 400,000 ​ 400,000 ​ 2025 notes 2025 4.500 % 400,000 ​ 400,000 ​ 2026 notes 2026 5.250 % 600,000 ​ 600,000 ​ 2027 notes 2027 4.500 % 700,000 ​ 700,000 ​ 2028 notes 2028 4.750 % 550,000 ​ 550,000 ​ 2029 notes 2029 3.625 % 500,000 ​ 500,000 ​ Subordinated debt 2021 9.000 % 20,000 ​ 13,541 ​ Discount – net ​ ( 21,395 ) ​ ( 23,041 ) ​ Deferred financing costs – net ​ ( 21,806 ) ​ ( 23,778 ) ​ Total senior notes and other unsecured borrowings – net ​ 3,826,799 ​ 3,816,722 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total unsecured borrowings – net ​ 4,839,582 ​ 4,746,460 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total secured and unsecured borrowings – net (7) ​ $ 5,225,558 ​ $ 5,136,140 ​ (1) Reflects the weighted average annual contractual interest rate on the mortgages at June 30, 2020; secured by real estate assets with a net carrying value of $ 603.7 million as of June 30, 2020. (2) Borrowing is the debt of a consolidated joint venture. (3) During the first quarter of 2020, we drew approximately $ 300 million on our existing $ 1.25 billion revolving credit facility as a precautionary measure due to the COVID-19 outbreak. This borrowing was included in cash and cash equivalents on our Consolidated Balance Sheets as of March 31, 2020. We repaid this $ 300 million borrowing in June 2020. (4) Actual borrowing in British Pounds Sterling and remeasured to USD. (5) Omega OP or wholly owned subsidiaries of Omega OP are the obligor on these borrowings. (6) Includes $ 0.2 million of net deferred financing costs related to the Omega OP term loan as of June 30, 2020. (7) All borrowings are direct borrowings of Omega unless otherwise noted. ​ ​ 38 Table of Contents Subordinated Debt In connection with a 2010 acquisition, we assumed five separate $ 4.0 million subordinated notes bearing interest at 9 % per annum that mature on December 21, 2021. Interest on these notes is due quarterly with the principal balance due at maturity. These subordinated notes may be prepaid at any time without penalty. To the extent that the operator of the facilities fails to pay rent when due to us under our existing master lease, we have the right to offset the amounts owed to us against the amounts we owe to the lender under the notes. In the fourth quarter of 2019, we had recorded a reserve of $ 6.5 million in connection with the operator’s failure to pay rent, and we began offsetting certain interest and principal amounts payable by us against this reserve. During the second quarter of 2020, expressly subject to our reservation of rights under the terms of the notes and related agreement, we reversed this reserve, and ceased offsetting amounts against our note payments, as a result of the operator’s payment of all current and past due rent. ​ $ 400 Million Forward Starting Swaps On March 27, 2020 , we entered into five forward starting swaps totaling $ 400 million. We designated the forward starting swaps as cash flow hedges of interest rate risk associated with interest payments on a forecasted issuance of long-term debt, initially expected to occur within the next five years . The swaps are effective on August 1, 2023 and expire on August 1, 2033 and were issued at a fixed rate of approximately 0.8675 %. We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of 46 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments). ​ Certain of our other secured and unsecured borrowings are subject to customary affirmative and negative covenants, including financial covenants. As of June 30, 2020 and December 31, 2019, we were in compliance with all affirmative and negative covenants, including financial covenants, for our secured and unsecured borrowings. Omega OP, the guarantor of Parent’s outstanding senior notes, does not directly own any substantive assets other than its interest in non-guarantor subsidiaries. ​ 39 Table of Contents NOTE 15 – FINANCIAL INSTRUMENTS The net carrying amount of cash and cash equivalents, restricted cash, contractual receivables, other assets and accrued expenses and other liabilities reported in the Consolidated Balance Sheets approximates fair value because of the short maturity of these instruments (Level 1). At June 30, 2020 and December 31, 2019, the net carrying amounts and fair values of our other financial instruments were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2020 ​ December 31, 2019 ​ Carrying Fair Carrying Fair ​ Amount Value Amount Value ​ ​ (in thousands) Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investments in direct financing leases – net $ 10,870 ​ $ 10,870 $ 11,488 $ 11,488 Mortgage notes receivable – net ​ 886,029 ​ 918,771 ​ 773,563 ​ 819,083 Other investments – net ​ 434,653 ​ 433,372 ​ 419,228 ​ 412,934 Total ​ $ 1,331,552 ​ $ 1,363,013 ​ $ 1,204,279 ​ $ 1,243,505 Liabilities: ​ ​ ​ ​ Revolving line of credit ​ $ 216,434 ​ $ 216,434 ​ $ 125,000 ​ $ 125,000 Term loan ​ ​ 2,275 ​ ​ 2,275 ​ ​ 2,275 ​ ​ 2,275 U.S. term loan ​ 349,110 ​ 350,000 ​ 348,878 ​ 350,000 Sterling term loan ​ 123,226 ​ 123,560 ​ 132,059 ​ 132,480 Omega OP term loan ​ 74,812 ​ 75,000 ​ 74,763 ​ 75,000 2015 term loan ​ 249,201 ​ 250,000 ​ 249,038 ​ 250,000 4.375 % notes due 2023 – net ​ 696,397 ​ 731,683 ​ 695,812 ​ 749,693 4.95 % notes due 2024 – net ​ 396,208 ​ 424,019 ​ 395,702 ​ 442,327 4.50 % notes due 2025 – net ​ 396,543 ​ 413,691 ​ 396,163 ​ 430,529 5.25 % notes due 2026 – net ​ 596,085 ​ 646,954 ​ 595,732 ​ 675,078 4.50 % notes due 2027 – net ​ 690,177 ​ 735,801 ​ 689,445 ​ 759,475 4.75 % notes due 2028 – net ​ 542,395 ​ 584,818 ​ 541,891 ​ 602,967 3.625 % notes due 2029 – net ​ ​ 488,867 ​ ​ 489,288 ​ ​ 488,263 ​ ​ 500,792 HUD mortgages – net ​ ​ 383,701 ​ ​ 418,231 ​ ​ 387,405 ​ ​ 379,866 Subordinated debt – net ​ 20,127 ​ 21,753 ​ 13,714 ​ 15,253 Total ​ $ 5,225,558 ​ $ 5,483,507 ​ $ 5,136,140 ​ $ 5,490,735 ​ ​ Fair value estimates are subjective in nature and are dependent on a number of important assumptions, including estimates of future cash flows, risks, discount rates and relevant comparable market information associated with each financial instrument (see Note 2 – Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, 2019). The use of different market assumptions and estimation methodologies may have a material effect on the reported estimated fair value amounts. The following methods and assumptions were used in estimating fair value disclosures for financial instruments. ● Direct financing leases: The fair value of the investments in direct financing leases are estimated using a discounted cash flow analysis, using interest rates being offered for similar leases to borrowers with similar credit ratings (Level 3). ● Mortgage notes receivable: The fair value of the mortgage notes receivables are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3). 40 Table of Contents ● Other investments: Other investments are primarily comprised of notes receivable. The fair values of notes receivable are estimated using a discounted cash flow analysis, using interest rates being offered for similar loans to borrowers with similar credit ratings (Level 3). ● Revolving line of credit, secured borrowing and term loans: The fair value of our borrowings under variable rate agreements are estimated using a present value technique based on expected cash flows discounted using the current market rates (Level 3). ● Senior notes and subordinated debt: The fair value of our borrowings under fixed rate agreements are estimated using a present value technique based on inputs from trading activity provided by a third-party (Level 2). ​ ● HUD mortgages: The fair value of our borrowings under HUD debt agreements are estimated using an expected present value technique based on quotes obtained by HUD debt brokers (Level 2). ​ ​ ​ NOTE 16 – COMMITMENTS AND CONTINGENCIES Litigation On November 16, 2017, a purported securities class action complaint captioned Dror Gronich v. Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth was filed against the Company and certain of its officers in the United States District Court for the Southern District of New York (the “ District Court”), Case No. 1:17-cv-08983-NRB. On November 17, 2017, a second purported securities class action complaint captioned Steve Klein v. Omega Healthcare Investors, Inc., C. Taylor Pickett, Robert O. Stephenson, and Daniel J. Booth was filed against the Company and the same officers in the United States District Court for the Southern District of New York, Case No. 1:17-cv-09024-NRB. Thereafter, the District Court considered a series of applications by various shareholders to be named lead plaintiff, consolidated the two actions and designated Royce Setzer as the lead plaintiff. Pursuant to a Scheduling Order entered by the District Court, lead plaintiff Setzer and additional plaintiff Earl Holtzman filed a Consolidated Amended Class Action Complaint on May 25, 2018 (the “Securities Class Action”). The Securities Class Action purports to be a class action brought on behalf of shareholders who acquired the Company’s securities between May 3, 2017 and October 31, 2017. The Securities Class Action alleges that the defendants violated the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by making materially false and/or misleading statements, and by failing to disclose material adverse facts about the Company’s business, operations, and prospects, including the financial and operating results of one of the Company’s operators, the ability of such operator to make timely rent payments, and the impairment of certain of the Company’s leases and the uncollectibility of certain receivables. The Securities Class Action, which purports to assert claims for violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, as well as Section 20(a) of the Exchange Act, seeks an unspecified amount of monetary damages, interest, fees and expenses of attorneys and experts, and other relief. The Company and the officers named in the Securities Class Action filed a Motion to Dismiss on July 17, 2018. On March 25, 2019, the District Court entered an order dismissing with prejudice all claims against all defendants. Plaintiffs appealed the order to the United States Court of Appeals for the Second Circuit and the Court of Appeals heard oral argument on November 13, 2019. On August 3, 2020, the United States Court of Appeals for the Second Circuit issued a ruling reversing the District Court’s order of dismissal and remanding the case to the District Court for further proceedings. In addition, in the District Court, on March 26, 2020, Plaintiffs filed a motion for an indicative ruling regarding relief from final judgment based on allegedly newly-discovered evidence and for leave to file an amended complaint. The Company filed an opposition on May 1, 2020. On August 3, 2020, after the Second Circuit Court of Appeals issued its Opinion, Plaintiffs requested that the District Court treat this motion as solely a motion to amend. ​ 41 Table of Contents The Board of Directors received a demand letter, dated April 9, 2018, from an attorney representing Phillip Swan (“Swan”), a purported current shareholder of the Company, relating to the subject matter covered by the Securities Class Action (the “Swan Shareholder Demand”). The letter demanded that the Board of Directors conduct an investigation into the statements and other matters at issue in the Securities Class Action and commence legal proceedings against each party identified as being responsible for the alleged activities. After an investigation and due consideration, and in the exercise of its business judgment, the Board determined that it is not in the best interests of the Company to commence litigation against any current or former officers or directors based on the matters raised in the Swan Shareholder Demand. In November 2018, the Board also received shareholder demands from two additional purported shareholders, Tom Bradley (“Bradley”) and Sarah Smith (“Smith”), each represented by the same counsel as Swan, that were substantively identical to the Swan Shareholder Demand (the “Bradley/Smith Shareholder Demands”). The Board reached the same conclusion with respect to those demands as it reached with the Swan Shareholder Demand. On August 22, 2018, Stourbridge Investments LLC, a purported stockholder of the Company, filed a derivative action purportedly on behalf of the Company in the United States District Court for the Southern District of New York against the current directors of the Company as well as certain officers alleging violations of Section 14(a) of the Securities Exchange Act of 1934 and state-law claims including breach of fiduciary duty. Stourbridge Investments LLC v. Callen et al., No. 1:18-cv-07638. The complaint alleges, among other things, that the defendants are responsible for the Company’s failure to disclose the financial condition of Orianna Health Systems, the alleged non-disclosures that are also the subject of the Securities Class Action described above. The defendants in the action are the three individual defendants named in the Securities Class Action (Messrs. Pickett, Booth and Stephenson), as well as the Company’s non-management directors. The plaintiff did not make a demand on the Company to bring the action prior to filing it, but rather alleges that demand would have been futile. The parties have entered into a stipulation in which they agreed to stay the case, including any response by defendants, pending the entry of judgment or a voluntary dismissal with prejudice in the Securities Class Action. The agreed-upon stipulation and order to stay the case were entered by the Court on October 25, 2018. On January 30, 2019, Swan filed a derivative action in the Baltimore City Circuit Court of Maryland, purportedly on behalf of the Company against certain current and former directors of the Company as well as certain officers, asserting claims for breach of fiduciary duty, waste of corporate assets and unjust enrichment. Swan v. Pickett, et al., No. 24-C-19-000573. Swan alleges that the Swan Shareholder Demand was wrongfully refused. On February 21, 2019, Bradley and Smith filed a derivative action in the Baltimore City Circuit Court of Maryland, purportedly on behalf of the Company against certain current and former directors of the Company as well as certain officers, asserting claims for breach of fiduciary duty, abuse of control, gross mismanagement, and unjust enrichment. Bradley and Smith v. Callen, et al. , No. 24-c-19-000972. Bradley and Smith allege that the Bradley/Smith Shareholder Demands were wrongly refused. The derivative actions brought by Swan and Bradley and Smith have been consolidated under the heading of the Swan action. The parties in those actions have agreed to a stay of proceedings pending the issuance of a mandate from the Second Circuit Court of Appeals in the appeal of the dismissal of the Securities Class Action. On October 11, 2019, the Court issued an order adopting the stay of proceedings agreed to by the parties. The Company believes that the claims asserted against it in these lawsuits are without merit and intends to vigorously defend against them. Other ​ In September 2016, MedEquities received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice (“DOJ”), which indicates that it is conducting an investigation regarding alleged violations of the False Claims Act, Stark Law and Anti-Kickback Statute in connection with claims that may have been submitted to Medicare and other federal payors for services rendered to patients at Lakeway Regional Medical Center (the “Lakeway Hospital”) or by providers with financial relationships with Lakeway Hospital. As a result of the acquisition of MedEquities, the Company owns a 51 % interest in an unconsolidated partnership that owns the Lakeway Hospital (Lakeway Realty, L.L.C.). The CID requested certain documents and information related to the acquisition and ownership of the Lakeway Hospital through Lakeway Realty, L.L.C. The Company has learned that the DOJ is investigating MedEquities’ conduct in connection with its investigation of financial relationships related to the Lakeway Hospital, including allegations by the DOJ that these relationships violate and continue to violate the Anti-Kickback Statute and, as a result, related claims submitted to federal payors violated and continue to violate the False Claims Act. The Company is cooperating fully with the DOJ in connection with the CID and has produced all of the information that has been requested to date. 42 Table of Contents ​ The Company believes that the acquisition, ownership and leasing of the Lakeway Hospital through Lakeway Realty, L.L.C. was and is in compliance with all applicable laws. However, due to the uncertainties surrounding this matter and its ultimate outcome, we are unable to determine whether it is probable that any loss has been incurred. ​ In addition, we are subject to various other legal proceedings, claims and other actions arising out of the normal course of business. While any legal proceeding or claim has an element of uncertainty, management believes that the outcome of each lawsuit, claim or legal proceeding that is pending or threatened, or all of them combined, will not have a material adverse effect on our consolidated financial position or results of operations. Indemnification Agreements In connection with certain facility transitions, we have agreed to indemnify certain operators in certain events. As of June 30, 2020, our maximum funding commitment under these indemnification agreements was approximately $ 10.3 million. Claims under these indemnification agreements may be made within 18 months to 72 months of the transition date. These indemnification agreements were provided to certain operators in connection with facility transitions and generally would be applicable in the event that the prior operators do not perform under their transition agreements. The Company does not expect to fund a material amount under these indemnification agreements. ​ Commitments We have committed to fund the construction of new leased and mortgaged facilities, capital improvements and other commitments. We expect the funding of these commitments to be completed over the next several years. Our remaining commitments at June 30, 2020, are outlined in the table below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total commitments $ 673,634 ​ ​ Amounts funded to date (1) ​ ( 547,886 ) ​ ​ Remaining commitments ​ $ 125,748 ​ ​ (1) Includes finance costs. ​ ​ ​ 43 Table of Contents NOTE 17 – EARNINGS PER SHARE/UNIT The following tables set forth the computation of basic and diluted earnings per share/unit: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Omega ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, June 30, ​ ​ 2020 2019 2020 2019 ​ ​ (in thousands, except per share amounts) ​ Numerator: ​ ​ ​ ​ ​ ​ Net income ​ $ 101,960 ​ $ 75,671 ​ $ 194,239 ​ $ 147,853 ​ Less: net income attributable to noncontrolling interests ​ ( 2,653 ) ​ ( 2,530 ) ​ ( 5,017 ) ​ ( 5,010 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income available to common stockholders/Omega OP Unit holders ​ $ 99,307 ​ $ 73,141 ​ $ 189,222 ​ $ 142,843 ​ Denominator: ​ ​ ​ ​ ​ Denominator for basic earnings per share ​ 227,411 ​ 211,569 ​ 227,336 ​ 208,064 ​ Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ Common stock equivalents ​ 1,030 ​ 1,592 ​ 1,146 ​ 1,640 ​ Noncontrolling interest – Omega OP Units ​ 6,082 ​ 7,318 ​ 6,033 ​ 7,298 ​ Denominator for diluted earnings per share/unit ​ 234,523 ​ 220,479 ​ 234,515 ​ 217,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per share/unit - basic: ​ ​ ​ ​ ​ Net income available to common stockholders/Omega OP Unit holders ​ $ 0.44 ​ $ 0.35 ​ $ 0.83 ​ $ 0.69 ​ Earnings per share/unit – diluted: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 0.43 ​ $ 0.34 ​ $ 0.83 ​ $ 0.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Omega OP ​ ​ Three Months Ended Six Months Ended ​ ​ June 30, June 30, ​ ​ 2020 2019 2020 2019 ​ ​ (in thousands, except per share amounts) ​ Numerator: ​ ​ ​ ​ ​ ​ Net income ​ $ 101,960 ​ $ 75,671 ​ $ 194,239 ​ $ 147,853 ​ Add: net loss attributable to noncontrolling interests ​ 3 ​ — ​ 6 ​ — ​ Net income available to Omega OP Unit holders ​ $ 101,963 ​ $ 75,671 ​ $ 194,245 ​ $ 147,853 ​ Denominator: ​ ​ ​ ​ ​ Denominator for basic earnings per unit ​ 233,493 ​ 218,887 ​ 233,369 ​ 215,362 ​ Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ Omega OP Unit equivalents ​ ​ 1,030 ​ ​ 1,592 ​ ​ 1,146 ​ ​ 1,640 ​ Denominator for diluted earnings per unit ​ 234,523 ​ 220,479 ​ 234,515 ​ 217,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earnings per unit - basic: ​ ​ ​ ​ ​ ​ Net income available to Omega OP Unit holders ​ $ 0.44 ​ $ 0.35 ​ $ 0.83 ​ $ 0.69 ​ Earnings per unit - diluted: ​ ​ ​ ​ ​ Net income ​ $ 0.43 ​ $ 0.34 ​ $ 0.83 ​ $ 0.68 ​ ​ ​ ​ ​ ​ 44 Table of Contents ​ NOTE 18 – SUPPLEMENTAL DISCLOSURE TO CONSOLIDATED STATEMENTS OF CASH FLOWS The following are supplemental disclosures to the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ 2020 2019 ​ (in thousands) ​ Reconciliation of cash and cash equivalents and restricted cash: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 37,022 ​ $ 32,766 ​ Restricted cash ​ 4,543 ​ 1,372 ​ Cash, cash equivalents and restricted cash at end of period ​ $ 41,565 ​ $ 34,138 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental information: ​ ​ ​ ​ ​ Interest paid during the period, net of amounts capitalized ​ $ 112,035 ​ $ 102,200 ​ Taxes paid during the period ​ $ 4,497 ​ $ 2,284 ​ ​ ​ ​ ​ ​ ​ ​ ​ Non cash investing activities ​ ​ ​ Non cash acquisition of a business (see Note 2) ​ $ — ​ $ ( 566,966 ) ​ Non cash acquisition of real estate (see Note 2) ​ ​ — ​ ​ ( 143,174 ) ​ Non cash proceeds from sale of real estate investments (see Note 4) ​ ​ 83,910 ​ ​ — ​ Non cash placement of mortgages (see Note 4) ​ ( 86,936 ) ​ — ​ Non cash collection of mortgage principal ​ — ​ 11,874 ​ Non cash investment of other investments ​ ​ — ​ ​ ( 25,925 ) ​ Non cash proceeds from other investments ​ 3,026 ​ 149,542 ​ Non cash proceeds from direct financing lease ​ — ​ 4,970 ​ Initial non cash right of use asset - ground leases ​ ​ — ​ ​ 5,593 ​ Initial non cash lease liability - ground leases ​ ​ — ​ ​ ( 5,593 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Non cash financing activities ​ ​ ​ Debt assumed in merger (see Note 2) ​ $ — ​ $ 285,100 ​ Stock exchanged in merger (see Note 2) ​ ​ — ​ ​ 281,865 ​ Non cash borrowing of other long-term borrowings ​ ​ 6,459 ​ ​ — ​ Change in fair value of cash flow hedges ​ ​ ( 7,329 ) ​ ​ ( 7,641 ) ​ Remeasurement of debt denominated in a foreign currency ​ ( 13,953 ) ​ ( 720 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 19 – SUBSEQUENT EVENT During the third quarter of 2020, we amended our master lease with Maplewood Real Estate Holdings, LLC (“Maplewood”), an operator of primarily senior housing facilities, and provided a new credit facility to Maplewood. The new credit facility expanded Maplewood’s borrowing capacity by approximately $ 100 million to $ 220 million, in part to provide Maplewood additional liquidity in view of expected ongoing delays and costs associated with COVID-19. Maplewood refinanced existing notes and certain other funded obligations to us of approximately $ 120 million in aggregate via borrowings from the new credit facility. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 45 Table of Contents