Investor Presentation
June 2016
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Investor Presentation, June, 2016
Forward-looking Statements and Non-GAAP Information
3
This presentation may include projections and other “forward-looking statements” within the meaning of the Private SecuritiesLitigation Reform Act of 1995. Such statements relate to future events and expectations and involve unknown risks anduncertainties. Omega’s actual results or actions may differ materially from those projected in the forward-looking statements.For a summary of the specific risk factors that could cause results to differ materially from those expressed in the forward-lookingstatements, see Omega’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission.
This presentation may contain certain non-GAAP financial information including EBITDA, Adjusted EBITDA, Total Adjusted Debt(aka, Funded Debt), Adjusted FFO, Total Cash Fixed Charges and certain related ratios. A reconciliation of these non-GAAPdisclosures is available in the Exhibit to this presentation or on our website under “Non-GAAP Financial Measures” atwww.omegahealthcare.com. Other financial information is also available on our website.
Information is provided as of March 31, 2016, unless specifically stated otherwise. We assume no duty to update or supplementthe information provided.
Omega Overview
Investor Presentation, June, 2016
Omega Overview: Key Credit Highlights
5
Financial Strength
Portfolio Strength
Strong portfolio TTM rent coverage of 1.8x (EBITDARM) and 1.4x (EBITDAR) at 12/31/2015
Geographic and operator diversification with 83 operators across 42 states and the United Kingdom
No upcoming material lease expirations and no material lease renewal risk
Stable reimbursement outlook
Conservative leverage level with Debt / Adj. EBITDA of 4.86x (Q1 2016), in-line with our leverage target
Consistent and stable free cash flow with strong fixed charge coverage of 5.0x (Q1 2016)
Low Secured debt / Adj. EBITDA of 0.3x and strong commitment to unsecured borrowing structure with ~$9.3B of unencumbered assets
Minimal short-term debt maturities
Positive ratings trajectory with history of upgrades and commitment to investment grade profile
Significant liquidity with $750 million of cash and credit facility availability at 5/5/2016
Experienced Management
Team
Senior management team with average tenure of 15+ years
Proven ability to execute on strategies
Proven ability to handle troubled assets
Investor Presentation, June, 2016
Omega Overview: Facility and Investment Overview at December 31, 2015
6
Omega is the largest SNF-focused REIT
As of March 31, 2016, Omega portfolio consisted of 969 (1) operating facilities
Completed AVIV acquisition on April 1, 2015
Combination created operating, growth and cost of capital efficiencies
High quality and complementary portfolio
Significantly increased state and operator diversification
Accretive to adjusted FFO and FAD
Completed over $1.1 billion of investments since the Aviv acquisition
Facility Statistics Revenue Statistics
Skilled Nursing/Transitional
Care, 89%
Senior Housing,
11%
Rental Property83%
Direct Financing
Leases7%
Mortgages8%
Other2%
1) Excludes non-operating facilities either held-for-sale, closed and/or not currently providing patient services
Investor Presentation, June, 2016
Financial Overview: Shareholder Returns
7
1/1/2004 to 12/31/2015
OHI Share Price: 274.4%
RMZ Index: 88.1%
Quarterly Dividends as of 2/15/2016
1 Year Total Growth: 7.8%
3 Year Total Growth: 28.3%
5 Year Total Growth: 56.3%
1/1/2004 to 12/31/2015
Real Estate Investments: 19.6%
Operating Revenue: 19.9%
Adjusted FFO per Share: 11.8%
OHI Share Price: 11.1%
Dividend Yield at $0.57/Share Per Quarter 7.5%
(based on closing price on 2/18/2016 of $30.32)
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
$30.00
$32.00
$34.00
$36.00
$38.00
$40.00
$42.00
$44.00
$46.00
Omega Share Price Growth, 2002-2015
Compounded Annual Growth Rates Total Growth Percentages
Investor Presentation, June, 2016
Financial Overview: Shareholder Returns (cont’d)
8
Total Return Ann. Equiv. Ranking (2)
1 Year: -5.2% -5.2% 3rd
3 Year: 74.4% 20.4% 1st
5 Year: 115.3% 16.6% 1st
7 Year: 274.4% 20.8% 1st
10 Year: 446.2% 18.5% 1st (3)
1) Source: Bloomberg Comparative Analytics 2) Ranking among health care REITS: VTR, HCP, HCN, LTC, HR, NHI, SNH, SBRA3) Ranked 3rd among all 181 publicly traded equity REITs. Source: KeyBanc Capital Markets “The Leaderboard”, December 31, 2015
Shareholder Returns Through 12/31/2015 (1)
Tax Treatment
Total
Dividends
Ordinary
Income
Return of
Capital
% Ordinary
Income
% Return of
Capital
2011 1.55$ 0.99$ 0.56$ 63.8% 36.2%
2012 1.69 0.88 0.81 52.3% 47.7%
2013 1.86 1.54 0.32 82.6% 17.4%
2014 2.02 1.83 0.19 90.8% 9.2%
2015 2.18 1.13 1.05 52.0% 48.0%
9.30$ 6.38$ 2.92$ 68.6% 31.4%
Dividends per Share and Return of Capital %
Omega's Total Returns vs Healthcare REIT Average (2)
(Years ending 12/31/2015)
-50.0%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
300.0%
350.0%
400.0%
450.0%
500.0%
2016 YTD 1 Year 3 Year 5 Year 7 Year 10 Year
Omega's Total Returns Avg. Total Returns of Healthcare REITs
SNF Industry and Reimbursement Overview
Investor Presentation, June, 2016
Medicare Payment System Continues to Evolve
10
Shift Away from Traditional Fee-for-Service (FFS) from 2010 to 2015, Continued but Slower Growth in Alternative Payment Going Forward
2010 2015E 2020E
Sources: CMS Office of the Actuary for Spending and Enrollment. Avalere analysis for alternative payment model projections.
Investor Presentation, June, 2016
Medicare Payment System Continues to Evolve
11
Increasingly FFS Payments will be Bundled or Subject to Value-Based Adjustments
Sources: CMS Office of the Actuary for Spending and Enrollment. Avalere analysis for alternative payment model projections.
Investor Presentation, June, 2016
Attractive Fundamentals: Primary PAC Site
12
SNFs – preferred post-acute care environment with growing demand and limited supply
Medicare
Acute
Hospital
Discharges
43% Sent to Post-Acute
SNFs
49%
HHAs
39%
IRFs
8%
LTACHs
3%
Source: MedPAC Data Book, June 2015
Investor Presentation, June, 2016
Attractive Fundamentals: Demographic Trends Will Drive Volume
13
Source: US Census Bureau, December 2014 Release
Source: CMS Nursing Home Data Compendium, 2015 Edition
Percentage of U.S. SNF Residents by Age
6,304 6,727
7,482
9,132
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2015 2020 2025 2030
Po
pu
lati
on
Projected Population Growth: Aged 85+
2015 to 2030
5,792 6,470
8,061
10,513
-
2,000
4,000
6,000
8,000
10,000
12,000
2015 2020 2025 2030
Po
pu
lati
on
Projected Population Growth: Aged 80-84
2015 to 2030
AHCA “DC Updated”, Presented by Mark Parkinson, Pres. & CEO, April 18, 2016
Investor Presentation, June, 2016
Industry Overview: Attractive Fundamentals
14
Supply of facilities and beds to meet increasing future demand is limited due to CON restrictions, increasing occupancy prospects for existing facilities
(figures in 000s, unlessotherwise indicated)
Source: Compiled by American Health Care Association (AHCA) Research Department from CMS OSCAR/CASPER survey data (2001-2015)
Dec'01
Dec'02
Dec'03
Dec'04
Dec'05
Dec'06
Dec'07
Dec'08
Dec'09
Dec'10
Dec'11
Dec'12
Dec'13
Dec'14
Dec'15
Certified Beds 1,695k 1,700k 1,690k 1,682k 1,676k 1,673k 1,671k 1,669k 1,667k 1,670k 1,665k 1,667k 1,666k 1,663k 1,662k
Patients in Certified Beds 1,457k 1,457k 1,447k 1,439k 1,433k 1,430k 1,420k 1,411k 1,400k 1,394k 1,384k 1,383k 1,372k 1,368k 1,357k
Certified Facilities 16.6k 16.4k 16.3k 16.1k 16.0k 15.9k 15.8k 15.7k 15.7k 15.7k 15.6k 15.7k 15.7k 15.6k 15.7k
14.0k
14.4k
14.8k
15.2k
15.6k
16.0k
16.4k
16.8k
17.2k
17.6k
18.0k
18.4k
18.8k
1,300k
1,350k
1,400k
1,450k
1,500k
1,550k
1,600k
1,650k
1,700k
1,750k
Ce
rtif
ied
Fac
iliti
es
Be
ds
& P
atie
nts
Trend in Certified Nursing Facilities, Beds and Residents
Investor Presentation, June, 2016
Industry Overview: Attractive Fundamentals
15
Source: SNF Volume from November 2015 Avalere Health projection model (“Assessment of SNF Reimbursement and Utilization Landscape” Report); Medicare enrollment from 2015 Medicare Trustees’ Report
SNF Medicare patient days projected to grow due to increasing enrollment, even while lengths of stay decline under alternative payment models (bundling, managed care, ACOs, VBP)
Note: Conservative, Moderate, and Aggressive refer to model assumptions about rate of growth in alternative payment models (not traditional fee-for-service)
47.72
55.83
64.47
81.97
92.40
105.79
81.97
91.22
101.53
81.97
91.22
96.59
40
50
60
70
80
90
100
110
2010 2015 2020
(Mill
ion
s o
f D
ays
or
Be
ne
fici
arie
s)
Yearly Medicare SNF Volume (Days)
Total Medicare Enrollment (Beneficiaries)
Conservative
Moderate
Aggressive
Portfolio Overview
Investor Presentation, June, 2016
Portfolio Overview: Summary
17
As of March 31, 2016
969 operating healthcare facilities, located in 42 states and the UK, operated by 83 third-party operators
Gross real estate investments of approximately $8.6B
Focused on leasing long-term care facilities (primarily skilled nursing facilities) to strong regional and local operators
Long term triple-net master leases with cross collateralization provisions
Strong credit profiles
Security deposits of three to six months
Monthly reporting requirements
Property level expenses are operator’s responsibility (labor, insurance, property taxes, capital expenditures)
Omega receives fixed rent payments from tenants, with annual escalators
Operators receive revenues through reimbursement of Medicare, Medicaid and private pay for services
Investor Presentation, June, 2016
Ohio11.2%
Florida10.0%
Texas8.3%
Michigan7.1%
California5.6%
Pennsylvania5.5%Indiana
5.4%South Carolina
2.9%
Arkansas2.9%
North Carolina2.9%
Mississippi2.9%
Virginia2.6%
Tennessee2.4%
Kentucky2.3%
Maryland2.2%
Washington2.1%
Other States & UK23.9%
Portfolio Overview: Omega State Diversification as of March 31, 2016
18
Rent/Interest by State 1
1) Rent excludes all GAAP required non-cash straight-line or lease inducement revenue2) Excludes seventeen facilities closed and/or not currently providing patient services; includes two facilities held-for-sale3) Many operators have facilities in multiple states
State
1Q16 Annualized
Contractual
Rent/Interest
% of Total
Rent/Interest Facilities (2)
Operators (3)
1. Ohio 89,121,209$ 11.2% 91 12
2. Florida 79,061,886 10.0% 97 12
3. Texas 65,446,721 8.3% 107 12
4. Michigan 56,160,428 7.1% 48 4
5. California 44,339,799 5.6% 60 11
6. Pennsylvania 43,399,177 5.5% 44 8
7. Indiana 43,103,672 5.4% 59 7
8. South Carolina 22,904,652 2.9% 20 2
9. Arkansas 22,864,449 2.9% 32 4
10. North Carolina 22,780,663 2.9% 31 5
11. Mississippi 22,733,956 2.9% 19 3
12. Virginia 20,284,777 2.6% 16 5
13. Tennessee 18,630,223 2.4% 20 8
14. Kentucky 17,922,599 2.3% 26 3
15. Maryland 17,752,214 2.2% 16 2
16. Washington 16,829,022 2.1% 21 6
Other States & UK 189,215,072 23.9% 262 72
TOTAL 792,550,521$ 100.0% 969 83
Investor Presentation, June, 2016
Ciena, 10.0%
Communicare, 6.7%
Genesis, 6.7%
Ark, 6.7%
Saber, 4.8%
HHC, 4.3%
Signature, 3.9%
Maplewood, 3.8%
Guardian, 3.7%Diversicare, 3.6%
73 Remaining
Operators, 45.9%
Portfolio Overview: Omega Operator Diversification as of March 31, 2016
19
Rent/Interest by Operator 1
1) Rent excludes all GAAP required non-cash straight-line or lease inducement revenue
Operator
1Q2016 Annualized
Contractual
Rent/Interest % of Total
1 Ciena 79,611,739$ 10.0%
2 Communicare 52,820,747 6.7%
3 Genesis 52,802,938 6.7%
4 Ark 52,727,047 6.7%
5 Saber 38,411,190 4.8%
6 HHC 34,092,055 4.3%
7 Signature 30,571,174 3.9%
8 Maplewood 30,336,535 3.8%
9 Guardian 29,129,509 3.7%
10 Diversicare 28,468,905 3.6%
73 Remaining Operators 363,578,683 45.9%
792,550,521$ 100.0%
Investor Presentation, June, 2016
Portfolio Overview: Omega’s Strong Portfolio Rent Coverage
20
Period Trailing Twelve Months (TTM) Period Trailing Twelve Months (TTM)
Ending EBITDARM EBITDAR Ending EBITDARM EBITDAR03/31/02 1.5 1.1 03/31/09 2.0 1.606/30/02 1.6 1.1 06/30/09 2.0 1.609/30/02 1.6 1.1 09/30/09 2.0 1.612/31/02 1.5 1.1 12/31/09 2.0 1.603/31/03 1.5 1.1 03/31/10 2.0 1.606/30/03 1.5 1.1 06/30/10 2.0 1.609/30/03 1.5 1.1 09/30/10 2.1 1.612/31/03 1.5 1.1 12/31/10 2.2 1.73/31/04 1.6 1.1 3/31/11 2.2 1.86/30/04 1.7 1.2 6/30/11 2.3 1.89/30/04 1.8 1.3 9/30/11 2.3 1.9
12/31/04 1.9 1.4 12/31/11 2.2 1.83/31/05 1.8 1.4 3/31/12 2.1 1.76/30/05 1.9 1.4 6/30/12 2.0 1.69/30/05 1.9 1.5 9/30/12 2.0 1.5
12/31/05 2.0 1.5 12/31/12 2.0 1.53/31/06 2.0 1.6 3/31/13 2.0 1.56/30/06 2.1 1.6 6/30/13 1.9 1.59/30/06 2.1 1.6 9/30/13 1.9 1.5
12/31/06 2.1 1.7 12/31/13 1.9 1.43/31/07 2.1 1.7 3/31/14 1.8 1.46/30/07 2.2 1.7 6/30/14 1.8 1.49/30/07 2.2 1.8 9/30/14 1.8 1.4
12/31/07 2.2 1.8 12/31/14 1.8 1.43/31/08 2.2 1.8 3/31/15 1.8 1.46/30/08 2.1 1.7 6/30/15 1.8 1.49/30/08 2.1 1.7 9/30/15 1.8 1.4
12/31/08 2.0 1.6 12/31/15 1.8 1.4
1.0
1.3
1.5
1.8
2.0
2.3
2.5
TTM EBITDARM & EBITDAR Coverage
12/31/2001 to 12/31/2015, Quarterly
Series1 Series2
Investor Presentation, June, 2016
Portfolio Overview: Operator Cash Flow Coverages – Peer Group Comparison
21
1.8x 1.9x
1.8x 1.7x 1.7x
1.1x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
OHI VTR SBRA HCN CCP HCP
1.4x 1.5x
1.4x 1.4x
1.2x
0.9x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
OHI VTR SBRA HCN CCP HCP
(1)
SNF EBITDARM Coverage (TTM) SNF EBITDAR Coverage (TTM)
Source: Q1 2016 Supplemental Information presentations. HCP coverages only include the HCR Manor Care portfolio, as it represents 77% ($3.94Bn) of their SNF investments. An additional 9.4% of their SNF investments covers at 1.8x and 1.4x, but coverages for the remaining 13% SNF portfolio are not reported.
1) Estimated based on the spread of EBITDARM to EBITDAR Coverage (~0.4x) for OHI, SBRA, HCN and CCP
Financial Overview
Investor Presentation, June, 2016
Financial Overview: Consistent Financial Policy
23
Q1 2016 (unless otherwise noted)
Conservative capitalization
Debt to adjusted EBITDA ratio of 4.0x – 5.0x: 4.86x (see website)
Significant liquidity
$1.25B revolving credit facility: $750 million of availability (as of May 5, 2016)
Well-laddered debt maturities No maturities until June 2019 (assuming allowable credit facility extensions)
Financial flexibility
Capital markets access
Minimize encumbered assets
Funded Debt to Total Asset Value: 46.0%
Adjusted Fixed Charge Ratio >3.5x: 5.0x (see website)
Stable dividend payout ratio
Less than 85% of AFFO: Payout of 70%
Less than 90% of AFAD: Payout of 78%
Fifteen consecutive quarters of dividend increases
Investor Presentation, June, 2016
3.8x
3.1x3.3x
3.5x
4.0x 4.1x
4.7x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
4.5x
5.0x
2009 2010 2011 2012 2013 2014 2015
3.7x
4.3x
4.8x 4.7x4.4x
4.7x 4.6x
1.3x
0.7x0.9x 0.9x
0.6x 0.5x0.3x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
2009 2010 2011 2012 2013 2014 2015
Total Debt / Adj. EBITDA Secured Debt / Adj. EBITDA
Financial Overview: Conservative Capitalization
24
(1) Adjusted annualized EBITDA includes revenue for all new investments as if they occurred January 1 of their respective year. Debt amounts exclude the fair value adjustments on HUD debt and the net premium or discount on the unsecured notes.
(2) Reflects adjusted annualized EBITDA divided by the sum of cash interest and preferred dividends, if any.
Leverage (1) Cash Fixed Charge Coverage (2)
Target Debt to Adjusted EBITDA Ratio of 4.0x – 5.0x
• Typically have used drawings under the revolver to make acquisitions and replenished revolver availability with long term debt and equity issuances
4.86x for Q1:16 Annualized 5.3x for Q1:16 Annualized
Investor Presentation, June, 2016
$530M $500MTermLoans
$350MTermLoan
$250MTermLoan
$400M5.875%Notes $250M
4.50%Notes
$600M5.25%Notes
$700M4.50%Notes
$720MAvailable
$180M
$20.0 Msub-
Notes
$400M4.95%Notes
$50M$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
$550
$600
$650
$700
$750
$800
$850
$900
$950
$1,000
$1,050
$1,100
$1,150
$1,200
$1,250
$1,300
$1,350
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028-45
$ M
illio
ns
Financial Overview: Conservative Capitalization
25
Debt Maturity Schedule at 3/31/2016
• $2.35B unsecured revolving credit and term loan facilities
$1.25B revolver with a June 2018 maturity, with an additional year option
$1.1B term loans
$750MM available as of May 5,2016
• No near bond term maturities
2024 $400MM 5.875% Notes arecallable in March 2017
$1.25BRevolving
Credit Facility:$530M
drawn at3/31/2016
Approximatebalance ofamortizingHUD Loansat 12/31/28
with finalmaturities
to 2044
5.875% NotesCallable Mar 2017
$180MSecured loans at4.00%
Investor Presentation, June, 2016
Debt / Adj. Total
Assets
Unencumbered
Assets /
Unsecured Debt
Secured Debt /
Adj. Total Assets
Req. <= 60% >= 150% <= 40%
6/30/15 Actual 44% 241% 2%
Status Pass Pass Pass
Req. <= 60% >= 150% <= 40%
9/30/15 Actual 45% 204% 2%
Status Pass Pass Pass
Req. <= 60% >= 150% <= 40%
12/31/15 Actual 45% 204% 2%
Status Pass Pass Pass
Req. <= 60% >= 150% <= 40%
3/31/16 Actual 48% 204% 2%
Status Pass Pass Pass
Financial Overview: Conservative Capitalization
26
Financial Covenant Review
• Strong balance sheet with significant cushion on all covenants
• Leverage ratio is key covenant
Defined as “Funded Debt to TotalAsset Value” not to exceed 60%
Approximately 46% at Q1 2016
• Debt to Adjusted EBITDA is 4.86x for Q1 2016
• Currently have ability to suspend high yield related covenants on 2024 bonds (have not elected to do so) leaving only standard REIT covenants
Key Bond Covenants
Key Credit Facility Covenants
Consolidated
Leverage
Ratio
Secured
Leverage
Ratio
Unsecured
Leverage
Ratio
Fixed
Charge Cov.
Ratio
Unsecured
Interest Cov.
Ratio
Req. <= 60% <=30% <= 60% >=1.50 to 1 >=2.00 to 1
6/30/15 Actual 42% 3% 39% 4.2 4.7
Status Pass Pass Pass Pass Pass
Req. <= 60% <=30% <= 60% >=1.50 to 1 >=2.00 to 1
9/30/15 Actual 50% 3% 50% 4.5 4.6
Status Pass Pass Pass Pass Pass
Req. <= 60% <=30% <= 60% >=1.50 to 1 >=2.00 to 1
12/31/15 Actual 41% 3% 41% 4.8 4.6
Status Pass Pass Pass Pass Pass
Req. <= 60% <=30% <= 60% >=1.50 to 1 >=2.00 to 1
3/31/16 Actual 46% 3% 46% 5.2 4.9
Status Pass Pass Pass Pass Pass
Investor Recap
Investor Presentation, June, 2016
Investor Recap
28
Attractive industry fundamentals
Consistent and stable free cash flow and conservative capitalization
Strong portfolio rent coverage
Geographic and operator diversification
No upcoming material lease expirations
Proven track record of acquisitions and growth
Seasoned capital markets issuer
No long-term debt maturities until 2024
Experienced senior management team with average tenure of 15+ Years