Why Omega Healthcare Investors Inc. Stock Gained 12% in August

What happened

Omega Healthcare Investors Inc. (NYSE: OHI) stock outpaced the market last month, rising 12% compared to a 2% decline in the S&P 500, according to S&P Global Market Intelligence. The rally pushed shares back into significantly positive territory for the year, up 18% so far compared to a 19% increase in the broader market.

Inside an assisted living facility.

Image source: Getty Images.

So what

The real estate investment trust (REIT), which focuses on the healthcare industry, reported earnings results early in the month that Wall Street celebrated. Omega said in the report that funds from operations, a key industry growth metric, inched up to $157 million from $155 million a year earlier.

More importantly, the REIT accumulated a few new properties at attractive prices, including in a deal for over 60 skilled nursing and assisted living facilities for $735 million.

Now what

That deal should help Omega return to a faster growth pace this year, management said in a conference call with investors. However, there are several challenges to that bright forecast, including operating struggles with a major rent tenant located in Texas. Investors might also see new share issuances in the coming quarters, which would help boost capital levels at the expense of per-share returns.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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