• OHI is a battleground stock.
• Despite declining results, share prices have remained strong.
• A detailed look at FAD and dividend coverage.
• Tenant issues continue to crop up.
• OHI is in a position where they cannot afford another tenant problem, the dividend could be at risk.

Omega Healthcare Investors (OHI) is always good for a spirited discussion between the bulls and bears.

The bulls have been focussing on the macro story that the Baby Boomer generation is going to be a strong positive catalyst as they age and require the type of care provided by Skilled Nursing Facilities. The bears point to the reality that OHI is not covering its dividend, it has had several major tenants default on their rent, the fundamentals remain weak and there is no guarantee that the company is going to recover soon.

It has led to some very intriguing price action.

Data by YCharts

In 2018, despite an 8% drop in AFFO, the share price climbed 40%. Even with guidance for essentially flat AFFO (the mid-point is $3.06 compared to $3.04 for 2018), the share price remains substantially higher than it was for most of 2018 and higher than it traded in 2016 when its AFFO was $3.42. In other words, even as results declined, OHI has gotten more expensive.

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