Omega Healthcare Investors Inc (OHI): Big Dividend, 3 Big Risks

In particular, Alternative Payment Models and Medicare Advantage were expected to increase, but now the rate of that expansion is in question following the election, and this could be a good thing for the profitability of Omega’s operators and ultimately Omega. As mentioned in the annual report excerpt (above) “[N]ew and evolving payor and provider programs, including but not limited to Medicare Advantage, dual eligible, accountable care organizations, and bundled payments could adversely impact our tenants’ and operators’ liquidity, financial condition or results of operations.”

Worth considering, the following table shows how much of Omega’s operator revenues come from government programs, Medicaid in particular.

These percentages help quantify the material impact government programs have on Omega’s business, and lower regulatory burdens (more free markets) under Republican lawmakers may bode well for Omega over the long-term.

Overly Pessimistic Investors

Another reason that Omega Healthcare Investors Inc (NYSE:OHI) has underperformed is overly pessimistic investors. For starters, short interest recently exceeded 12%.