What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 188 added, 414 removed, 796 unchanged (43% of the section changed)

4 unchanged sentences

Three Months Ended

Nine Months Ended

Revenues and grant income:

Net patient revenues

12 unchanged sentences

Unrealized gains/(losses) on marketable equity securities

Income before income taxes

Income tax provision

Net (income)/loss attributable to noncontrolling interest

Net income attributable to National HealthCare Corporation

Earnings per share attributable to National HealthCare Corporation stockholders:

Income/(loss) before income taxes

Income tax (provision)/benefit

Net income/(loss)

Net income attributable to noncontrolling interest

Net income/(loss) attributable to National HealthCare Corporation

Earnings/(loss) per share attributable to National HealthCare Corporation stockholders:

Weighted average common shares outstanding:

2 unchanged sentences

NATIONAL HEALTHCARE CORPORATION

Interim Condensed Consolidated Statements of Comprehensive Income

Interim Condensed Consolidated Statements of Comprehensive Income/(Loss)

(unaudited –

1 unchanged sentence

Three Months Ended

Nine Months Ended

Other comprehensive income:

Unrealized gains on investments in restricted marketable debt securities

Reclassification adjustment for realized gains on sales of restricted marketable debt securities

Income tax expense related to items of other comprehensive income

Other comprehensive income, net of tax

Net (income)/loss attributable to noncontrolling interest

Comprehensive income attributable to National HealthCare Corporation

Net income/(loss)

Other comprehensive loss:

Unrealized losses on investments in marketable debt securities

Reclassification adjustment for realized gains on sales of marketable debt securities

Income tax benefit related to items of other comprehensive income

Other comprehensive loss, net of tax

Net income attributable to noncontrolling interest

Comprehensive income/(loss) attributable to National HealthCare Corporation

The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.

2 unchanged sentences

(in thousands)

September 30,

March 31, 2021

Current Assets:

2 unchanged sentences

Marketable equity securities

Marketable debt securities

Restricted marketable equity securities

Restricted marketable debt securities, current portion

19 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

March 31, 2021

Liabilities and Stockholders ’

21 unchanged sentences

23,510  

16,068  

Contract liabilities

51,253  

Dividends payable

Current maturities of long-term debt

51,253  

Dividends payable

Total current liabilities

3 unchanged sentences

10,540  

14,963  

Operating lease liabilities, less current portion

33 unchanged sentences

$ 1,362,132  

 The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.

NATIONAL HEALTHCARE CORPORATION

2 unchanged sentences

in thousands)   

Nine Months Ended

Three Months Ended

Cash Flows From Operating Activities:

Net income/(loss)

Adjustments to reconcile net income to net cash provided by operating activities:

3 unchanged sentences

Unrealized (gains)/losses on marketable equity securities

Gains on sale of restricted marketable debt securities

Gains on sale of marketable debt securities

Gains on acquisitions of equity method investments

3 unchanged sentences

Accounts receivable

Income tax receivable

Federal income tax receivable

Prepaid expenses and other assets

4 unchanged sentences

Provider relief funds

Contract liabilities

Other current liabilities

7 unchanged sentences

Collections of notes receivable

Purchases of restricted marketable debt securities

Proceeds from sale of restricted marketable debt securities

Purchases of marketable securities

Proceeds from sale of marketable securities

Net cash used in investing activities

1 unchanged sentence

Borrowings under credit facility

Repayments under credit facility

Principal payments under finance lease obligations

Dividends paid to common stockholders

Noncontrolling interest contributions/(distributions)

Noncontrolling interest contributions

Issuance of common shares

Repurchase of common shares

Entrance fee deposits/(refunds)

Net cash used in financing activities

Net Increase in Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

Entrance fee refunds

Net cash (used in)/provided by financing activities

Net (Decrease)/Increase in Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Beginning of Period

10 unchanged sentences

Stockholders’

Income (Loss)

Balance at January 1, 2020

15,332,206  

$ 222,787  

$ 553,093  

$ 2,560  

$ 779,069  

Net income/(loss)

Noncontrolling interest contributions

Equity contributed by noncontrolling interest

Other comprehensive loss

2 unchanged sentences

options exercised

15,006  

Repurchase of common shares

1 unchanged sentence

Balance at March 31, 2020

Noncontrolling interest contributions

Other comprehensive income

Stock–based compensation

Shares sold –

options exercised

Repurchase of common shares

Dividends declared to common stockholders ($0.52 per share)

Balance at June 30, 2020

Noncontrolling interest contributions

Other comprehensive income

Stock–based compensation

Shares sold –

options exercised

Dividends declared to common stockholders ($0.52 per share)

Balance at September 30, 2020

NATIONAL HEALTHCARE CORPORATION

Interim Condensed Consolidated Statements of Stockholders’

Equity (con’t)

(in thousands, except share and per share amounts)

15,346,601  

$ 223,600  

$ 518,261  

743,355  

Comprehensive

Stockholders’

Income (Loss)

Balance at January 1, 2021

Net income/(loss)

Other comprehensive income

15,369,745  

$ 226,943  

$ 563,024  

$ 5,057  

$ 3,083  

$ 798,260  

21,267  

21,308  

Other comprehensive loss

Stock–based compensation

1 unchanged sentence

options exercised

24,331  

Repurchase of common shares

1 unchanged sentence

Balance at March 31, 2021

Net income/(loss)

Noncontrolling interest distributions

Other comprehensive income

Stock–based compensation

Shares sold –

options exercised

Dividends declared to common stockholders ($0.52 per share)

Balance at June 30, 2019

Net income/(loss)

Noncontrolling interest distributions

Other comprehensive income

Stock–based compensation

Dividends declared to common stockholders ($0.52 per share)

Balance at September 30, 2019

15,390,140  

$ 227,487  

$ 576,288  

$ 3,135  

$ 3,124  

810,188  

The accompanying notes to interim condensed consolidated financial statements are an integral part of these consolidated statements.

1 unchanged sentence

Notes to Interim Condensed Consolidated Financial Statements

September 30, 2020

March 31, 2021

(unaudited)  

3 unchanged sentences

or the “Company”) is a leading provider of senior health care services.

As of September 30, 2020, we operate or manage, through certain affiliates, 76 skilled nursing facilities with a total of 9,633 licensed beds, 24 assisted living facilities, five independent living facilities, one behavioral health hospital, and 35 homecare programs.

As of March 31, 2021, we operate or manage, through certain affiliates, 75 skilled nursing facilities with a total of 9,463 licensed beds, 24 assisted living facilities, five independent living facilities, one behavioral health hospital, and 35 homecare programs.

We operate specialized care units within certain of our healthcare centers such as Alzheimer's disease care units and sub-acute nursing units.

17 unchanged sentences

The Company presents the amount of consolidated net income that is attributable to NHC and the noncontrolling interest in its consolidated statements of operations.

We assume that users of these interim financial statements have read or have access to the audited December 31, 2019 consolidated financial statements and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context.

We assume that users of these interim financial statements have read or have access to the audited December 31, 2020 

consolidated financial statements and that the adequacy of additional disclosure needed for a fair presentation, except in regard to material contingencies, may be determined in that context.

Accordingly, footnotes and other disclosures which would substantially duplicate the disclosure contained in our most recent annual report to stockholders have been omitted.

4 unchanged sentences

Actual results could differ from those estimates and could cause our reported net income to vary significantly from period to period, including but not limited to, the potential future effects of the novel coronavirus (“COVID- 19”

Recently Adopted Accounting Guidance

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016 - 13, Financial Instruments –

Credit Losses:

Measurement of Credit Losses on Financial Instruments .

2016 - 13 adds to U.S.

GAAP an impairment model that is based on expected losses rather than incurred losses.

Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses.

The ASU is also intended to reduce the complexity of U.S.

GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments.

This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those annual periods.

The Company adopted the standard as of January 1, 2020.

This standard did not have a material impact on our interim condensed consolidated financial statements;

however, we did update our processes specifically in how we monitor credit related declines in market value for our available for sale marketable debt securities.

On December 18, 2019, the FASB issued ASU No.

2019 - 12, Income Taxes (Topic 740 ):

Simplifying the Accounting for Income Taxes .

This ASU is part of the FASB’s overall simplification initiative to reduce the costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements.

This ASU removes certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation, and calculating income taxes in interim periods.

The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group.

2019 - 12 is effective for reporting periods beginning after December 15, 2020, with early adoption permitted.

On January 1, 2020, the Company early adopted the provisions of ASU No.

This standard did not have a material impact on our interim condensed consolidated financial statements.

Net Patient Revenues and Accounts Receivable

11 unchanged sentences

Credit losses are recorded as bad debt expense, which is included as a component of other operating expenses in the interim condensed consolidated statements of operations.

Bad debt expense was $ 1,463,000 and $ 3,538,000 for the three months and nine months ended September 30, 2020.

For the three months and nine months ended September 30, 2019, bad debt expense was $ 827,000 and $ 2,866,000 , respectively.

As of September 30, 2020, and December 31, 2019, the Company has recorded allowance for doubtful accounts of $ 6,295,000 and $ 4,451,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

Bad debt expense was $ 919,000 and $ 830,000 for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, and December 31, 2020, the Company has recorded allowance for doubtful accounts of $ 6,268,000 and $ 5,672,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

Other Revenues

4 unchanged sentences

We record other revenues as the performance obligations are satisfied based on the terms of our contractual arrangements.

We recognize rental income based on the terms of our operating leases.

Under certain of our leases, we receive variable rent, which is based on the increase in revenues of a lessee over a base year.

We recognize variable rent annually or monthly, as applicable, when, based on the actual revenue of the lessee is earned.

Government Grants

14 unchanged sentences

With the Company being a healthcare provider, the majority of our expenses are "cost of revenue" items.

Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation, which were $ 10,921,000 and $ 24,535,000  for the three months and nine months ended September 30, 2020, respectively.

General and administrative costs were $ 7,170,000 and $ 18,991,000 for the three months and nine months ended September 30, 2019, respectively.

Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation, which were $ 5,369,000 and $ 5,498,000  for the three months ended March 31, 2021 and 2020, respectively.

Long-Term Leases

6 unchanged sentences

Leases with a lease term of 12 months or less at inception are not recorded on our interim condensed consolidated balance sheets and are expensed on a straight-line basis over the lease term in our interim condensed consolidated statements of operations.

We recognize lease components and non-lease components together and not as separate parts of a lease for real estate leases.

Operating lease right-of-use assets and liabilities are recorded at the present value of the lease payments over the lease term.

11 unchanged sentences

We perform our annual goodwill impairment assessment on the first day of the fourth quarter. 

At September 30, 2020, the Company reviewed the carrying value of goodwill for impairment indicators due to the events and circumstances surrounding the COVID- 19 pandemic.

As a result of the review, there were no impairment indicators regarding the Company’s goodwill during the three months ended September 30, 2020 that required a quantitative test to be performed.

At March 31, 2021, the Company reviewed the carrying value of goodwill for impairment indicators, including due to the events and circumstances surrounding the Coronavirus Pandemic ("COVID- 19" ).

As a result of the review, there were no impairment indicators regarding the Company’s goodwill during the three months ended March 31, 2021 that required a quantitative test to be performed.

However, our accounting estimates could materially change from period to period due to changing market factors, including those driven by COVID- 19.

18 unchanged sentences

Residents at this retirement center may enter into continuing care contracts with us.

The contracts provide that 10 % of the resident entry fee becomes non-refundable upon occupancy, and the remaining refundable portion of the entry fee is calculated using the lessor of the price at which the apartment is re-assigned or 90 % of the original entry fee, plus 40 % of any appreciation if the apartment exceeds the original resident’s entry fee.

Non-refundable fees are included as a component of the transaction price and are amortized into revenue over the actuarily determined remaining life of the resident, which is the expected period of occupancy by the resident.

1 unchanged sentence

Refundable entrance fees are not included as part of the transaction price and are classified as noncurrent liabilities section of our consolidated balance sheets.

As of September 30, 2020, and December 31, 2019, we have recorded refundable entrance fees in the amount of $ 7,462,000 and $7,455,000, respectively.

As of March 31, 2021, and December 31, 2020, we have recorded refundable entrance fees in the amount of $ 7,334,000 and $ 7,462,000 , respectively.

We also annually estimate the present value of the cost of future services and the use of facilities to be provided to the current CCRC residents and compare that amount with the balance of non-refundable deferred revenue from entrance fees received.

If the present value of the cost of future services exceeds the related anticipated revenues, a liability is recorded with a corresponding charge to income.

As of September 30, 2020, and December 31, 2019, we have recorded a future service obligation liability in the amount of $ 2,035,000 .

As of March 31, 2021, and December 31, 2020, we have recorded a future service obligation liability in the amount of $2,177,000.

This obligation is reflected within other noncurrent liabilities in the interim condensed consolidated balance sheets. 

6 unchanged sentences

The Company’s earnings per share is calculated based on net income attributable to NHC’s stockholders.

The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest.

The carrying amount of the noncontrolling interest is adjusted based on an allocation of the subsidiary earnings, contributions, and distributions.

Variable Interest Entities

1 unchanged sentence

We analyze our investments in these limited liability companies to determine if the company is considered a variable interest entity (“VIE”) and would require consolidation.

To the extent that we own interests in a VIE and we (i) are the sole entity that has the power to direct the activities of the VIE and (ii) have the obligation or rights to absorb the VIE's losses or receive its benefits, then we would be determined to be the primary beneficiary and would consolidate the VIE.

To the extent that we own interests in a VIE and we (i) have the power to direct the activities of the VIE and (ii) have the obligation or rights to absorb the VIE's losses or receive its benefits, then we would be determined to be the primary beneficiary and would consolidate the VIE.

To the extent we own interests in a VIE, then at each reporting period, we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary.

2 unchanged sentences

in the consolidated balance sheets.

Prior Period Classification

Certain amounts in prior periods have been reclassified to conform with current period presentation.

Note 3 –

Coronavirus Pandemic ("COVID- 19" )

Coronavirus Pandemic

In early March 2020, COVID- 19, a disease caused by the novel strain of the coronavirus, was characterized as a pandemic by the World Health Organization.

The COVID- 19 virus has spread rapidly, with every state in the United States (“U.S.”) having confirmed cases.

The rapid spread has resulted in authorities around the U.S.

The COVID- 19 virus spread rapidly, with every state in the United States (“U.S.”) having confirmed cases.

The rapid spread resulted in authorities around the U.S.

implementing various measures to contain the virus, such as quarantines, shelter-in-place orders and business shutdowns.

The pandemic and these containment measures have had an adverse impact on the Company's results of operations in 2020.

The financial results for the second and third quarters of 2020 have been significantly impacted by COVID- 19 with census in our skilled nursing facilities dropping to 81.3 % during the third quarter of 2020, while we also incurred significantly increased operating expenses.

The pandemic and these containment measures had an adverse impact on the Company's results of operations in 2020 and for the three months ended March 31, 2021.

For the first time since the beginning of the COVID- 19 pandemic, the census in our skilled nursing facilities increased approximately 3.5 % from January 1, 2021 through 

March 31, 2021. 

We began our first vaccination clinics in our skilled nursing facilities around the middle of December 2020.

March 31, 2021, each of our 75  skilled nursing facilities had hosted at least three vaccination clinics onsite for our patients and partners (employees).

As the vaccination clinics progressed and as the vaccine became more accessible, we began to see a significant decline in COVID- 19 cases among our operations.   

government enacted several laws beginning in March 2020 designed to help the nation respond to the COVID- 19 pandemic.

The new laws impact healthcare providers in a variety of ways, but the largest legislation from a monetary relief perspective is the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). 

The CARES Act provided $2.2 trillion of economy-wide financial stimulus in the form of financial aid to individuals, businesses, nonprofits, states and municipalities.

The CARES Act originally appropriated $100 billion to establish the Public Health and Social Services Emergency Fund , which is referred to as the Provider Relief Fund.

The new laws impacted healthcare providers in a variety of ways, but the largest legislation from a monetary relief perspective is the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). Through the CARES Act, as well as the Paycheck Protection Program and Health Care Enhancement Act ("PPPCHE"), the federal government has allocated $178 billion to the Public Health and Social Services Emergency Fund , which is referred to as the Provider Relief Fund.

The Provider Relief Fund is administered through grants and other mechanisms to skilled nursing providers, home health providers, hospitals, and other Medicare and Medicaid enrolled providers to cover any unreimbursed health care related expenses or lost revenue attributable to the public health emergency resulting from COVID- 19.

On April 24, 2020, another $75 billion was added to the Provider Relief Fund by the Paycheck Protection Program and Health Care Enactment Act, bringing the total amount appropriated in the fund to $175 billion. 

During the second and third quarters of 2020, we received four disbursements from the Provider Relief Fund which totaled $ 58,184,000 .

During the three months ending March 31, 2021, we received additional disbursements from the Provider Relief Fund which totaled $ 30,191,000 .

These funds come with terms and condition certifications in which all providers are required to submit documents to ensure the funds will be used for healthcare-related expenses or lost revenue attributable to COVID- 19.

Of the $58,184,000  of funds received, the Company recorded $ 12,132,000 and $ 36,780,000  of government stimulus income for the three  and nine months ended September 30, 2020, respectively. 

As of September 30, 2020, amounts not recognized as income are $ 21,404,000  and are reflected in the current liability section of our interim condensed consolidated balance sheet (provider relief funds).

The Company recorded $ 22,749,000  of government stimulus income from the Provider Relief Funds for the three  months ended March 31, 2021. 

The grant income was determined on a systemic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate.

The Company’s assessment of whether the terms and conditions for amounts received have been met for income recognition and the Company’s related income calculation considered all frequently asked questions and other interpretive guidance issued to date by the U.S.

Department of Health and Human Services (“HHS”).

As of March 31, 2021, amounts not recognized as income are $ 23,510,000  and are reflected in the current liability section of our interim condensed consolidated balance sheet (provider relief funds).

We anticipate incurring additional COVID- 19 related expenses or lost revenues in the future;

therefore, at this time, we believe that we will fully utilize the remaining $21,404,000  of provider relief funds before the reporting requirement deadlines outlined by the U.S.

Department of Health and Human Services (“HHS”). 

The government stimulus income estimates we recorded at 

September 30, 2020 

may change as our ability to utilize and retain the funds will depend on the magnitude and impact of the pandemic, as well as HHS' reporting requirements as they continue to change and evolve. 

On October 22, 2020, HHS issued an updated Post-Payment Notice of Reporting Requirements ( "October 22, 2020 Notice") which, among other changes, materially revises the definition of lost revenues that was the basis for the grant income we recognized during the three and nine months ended September 30, 2020. 

As a non-recognizable subsequent event, the Company's estimate as of September 30, 2020, as set forth above, has 

not been updated for the October 22, 2020 Notice;

additional information is included in Note 17.

therefore, at this time, we believe that we will fully utilize the remaining $23,510,000  of provider relief funds before the reporting requirement deadlines outlined by HHS.

Additionally, as part of the CARES Act, the legislation included an expansion of the Medicare Accelerated and Advance Payment Program.

1 unchanged sentence

We received approximately $ 51,253,000  as part of this program.

On October 8, 2020 as part of the Continuing Appropriations Act, 2021 and Other Extensions Act, the Centers for Medicare & Medicaid Services’

(“CMS”) amended the repayment terms for the accelerated and advance payments.

These funds will begin to be applied against claims for services provided to Medicare patients after approximately one year from the date we received the funds.

2 unchanged sentences

Any remaining balance that was not paid through the recoupment process within twenty-nine months of receipt of the funds will be required to be paid on-demand, subject to an interest rate of four percent.

As of September 30, 2020, the accelerated payments are reflected within contract liabilities in the interim condensed consolidated balance sheets as the related performance obligations have not been completed.

The CARES Act also provided for the temporary suspension of the automatic 2% reduction of Medicare claim reimbursement for the period of May 1, 2020 through December 31, 2020 and the deferral of the employer share of social security taxes ( 6.2% ), effective for payments due after the March 2020 enactment date. 

The provision requires that the deferred taxes be paid over a two -year period with half the amount required to be paid by December 31, 2021, and the other half by December 31, 2022. 

As of September 30, 2020, we have deferred $ 14,854,000 of the Company’s share of the social security taxes. 

This deferral is included in other noncurrent liabilities within our interim condensed consolidated balance sheets. 

Recoupment of the accelerated payments began in the second quarter of 2021.

As of March 31, 2021, the accelerated payments are reflected within contract liabilities in the interim condensed consolidated balance sheet as the related performance obligations have not been completed.

The CARES Act temporarily suspended Medicare sequestration beginning May 1, 2020 through December 31, 2020.

The Medicare sequestration policy reduces fee-for-service Medicare payments by 2 percent. On December 27, 2020, the Consolidated Appropriations Act of 2021 further suspended the 2.0% payment adjustment through March 31, 2021.

On April 14, 2021, Congress extended the Medicare sequestration suspension period to December 31, 2021.

The CARES Act also temporarily permitted employers to defer the deposit and payment of the employer’s portion of the social security taxes ( 6.2% of employee wages) that otherwise would be due between March 27, 2020 and December 31, 2020.

The provision requires that the deferred taxes be paid over a two -year period with half the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.

At March 31, 2021, we have deferred $ 21,153,000 of the Company’s share of the social security taxes. 

At March 31, 2021, half of the payroll tax deferral is included in accrued payroll in the current liabilities section of the consolidated balance sheet and the other half of the payroll tax deferral is included in other noncurrent liabilities within our consolidated balance sheet. 

We have also received from many of the states in which we operate a supplemental Medicaid payment to help mitigate the incremental costs resulting from the COVID- 19 public health emergency.

For the three months ended March 31, 2021, we have recorded $ 3,955,000 in net patient revenues in our interim condensed consolidated statements of operations for these supplemental Medicaid payments.

Note 4 –

3 unchanged sentences

The Company’s net patient services can generally be classified into the following two categories:

( 1 ) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and a behavioral health hospital, and ( 2 ) homecare services.

( 1 ) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and a behavioral health hospital, and ( 2 ) homecare services (in thousands) .

Three Months Ended

Nine Months Ended

(in thousands)

Net patient revenues:

4 unchanged sentences

13,108  

13,172  

12,844  

37,564  

41,697  

Total net patient revenue

1 unchanged sentence

$ 244,095  

$ 697,149  

$ 706,465  

For inpatient services, revenue is recognized on a daily basis as each day represents a separate contract and performance obligation.

9 unchanged sentences

Three Months Ended

Nine Months Ended

Private Pay and Other

14 unchanged sentences

Contract Liabilities

Included in the Company’s condensed consolidated balance sheets are contract liabilities, which represent payments the Company receives in advance of services provided.

As of September 30, 2020, the Company has recorded $ 51,253,000 in contract liabilities related to receipts from the Medicare Accelerated and Advance Payment Program.

These funds will begin to be applied against claims for services provided to Medicare patients after approximately one year from the date we received the funds.

During the first eleven months after repayment begins, repayment will occur through an automatic recoupment of twenty-five percent of Medicare payments.

During the succeeding six months, repayment will occur through an automatic recoupment of fifty percent of Medicare payments.

Recoupment of the accelerated payments is currently expected to begin in April 2021.

Included in the Company’s interim condensed consolidated balance sheets are contract liabilities, which represent payments the Company receives in advance of services provided.

As of March 31, 2021 and December 31, 2020, the Company has recorded $ 51,253,000 in contract liabilities related to receipts from the Medicare Accelerated and Advance Payment Program. 

Recoupment of the accelerated payments began in the second quarter of 2021.

A summary of the contract liabilities are follows ( in thousands ):

Balance at December 31, 2020

Payments received

$ 51,253  

Payments received

Payments recognized

Balance at September 30, 2020

Balance at March 31, 2021

$ 51,253  

8 unchanged sentences

We believe that any differences between the net revenues recorded and final determination will not materially affect the consolidated financial statements.

We have made provisions of approximately $ 15,642,000 and $ 15,108,000 as of September 30, 2020 and December 31, 2019, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

We have made provisions of approximately $ 15,574,000 and $ 16,454,000 as of March 31, 2021 and December 31, 2020, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

Note 5 –

5 unchanged sentences

compensation and professional liability insurance policies that our wholly–owned insurance subsidiaries have written for certain healthcare operators to which we provide management or accounting services.

"Other" revenues include miscellaneous health care related earnings.

"Other" revenues include miscellaneous health care related earnings (in thousands) .

Three Months Ended

Nine Months Ended

(in thousands)

Rental income

1 unchanged sentence

$ 5,679  

$ 16,972  

$ 16,963  

Management and accounting services fees

12,651  

13,567  

Insurance services

2 unchanged sentences

$ 12,029  

$ 34,463  

$ 36,038  

Rental Income

2 unchanged sentences

Long Term Leases.

Rental income reflected in the interim condensed consolidated statements of operations consisted of the following:

Rental income reflected in the interim condensed consolidated statements of operations consisted of the following (in thousands) :

Three Months Ended

Nine Months Ended

(in thousands)

Operating lease payments

1 unchanged sentence

$ 5,503  

$ 16,514  

$ 16,450  

Variable lease payments

2 unchanged sentences

$ 5,679  

$ 16,972  

$ 16,963  

Management Fees from National

We manage five skilled nursing facilities owned by National.

For the three and nine months ended September 30, 2020, we recognized management fees and interest on management fees of $ 920,000 and $ 3,399,000 from these centers, respectively.

For the three months and nine months ended September 30, 2019, we recognized management fees and interest on management fees of $ 1,543,000 and $ 4,748,000 for these centers, respectively.

For the three months ended March 31, 2021 and 2020, we recognized management fees and interest on management fees of $ 896,000 and $ 1,537,000 from these centers, respectively.

Insurance Services

For workers’

compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months and nine months ended September 30, 2020 were $ 779,000 and $ 2,441,000 , respectively.

For the three and nine months ended September 30, 2019, the workers’

compensation premium revenues reflected in the interim condensed consolidated statements of operations were $ 866,000 and $ 2,656,000 .

compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 were $ 753,000 and $ 779,000 , respectively.

Associated losses and expenses are reflected in the interim condensed consolidated statements of operations as "Salaries, wages and benefits."

For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months and nine months ended September 30, 2020 were $ 515,000 and $ 1,633,000 , respectively.

For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020 were $ 511,000 and $ 603,000 , respectively.

Associated losses and expenses including those for self–insurance are included in the interim condensed consolidated statements of operations as "Other operating costs and expenses".

Note 6 –

Non–Operating Income

Non–operating income includes equity in earnings of unconsolidated investments, dividends and other realized gains and losses on sales of marketable securities, and interest income.

Operating Income

Non–operating income includes equity in earnings of unconsolidated investments, dividends and other realized gains and losses on sales of marketable securities, and interest income (in thousands) .

Three Months Ended

Nine Months Ended

(in thousands)

Equity in earnings of unconsolidated investments

1 unchanged sentence

$ 2,811  

$ 8,448  

$ 7,548  

Dividends and net realized gains on sales of securities

4 unchanged sentences

$ 8,146  

$ 20,578  

$ 20,936  

Caris HealthCare, L.P.

Our most significant equity method investment is a 75.1 % non–controlling ownership interest in Caris, a business that specializes in hospice care services. The carrying value of our investment is $ 35,035,000 and $ 36,673,000 at September 30, 2020 and December 31, 2019, respectively.

Our most significant equity method investment is a 75.1 % non–controlling ownership interest in Caris, a business that specializes in hospice care services. The carrying value of our investment is $ 35,480,000 and $ 38,916,000 at March 31, 2021 and December 31, 2020, respectively.

The carrying amounts are included in investments in unconsolidated companies in the consolidated balance sheets.

Summarized financial information of Caris for the nine months ended September 30, 2020 and 2019 is provided below (in thousands):

Nine Months Ended

Summarized financial information of Caris for the three months ended March 31, 2021 and 2020 is provided below (in thousands):

Three Months Ended

$ 15,228  

10 unchanged sentences

This remeasurement of our equity interest at fair value resulted in a gain of $ 1,707,000 .

The gain was recorded in "Non-operating income" in the interim condensed consolidated statements of operations.

Additionally, the excess of the fair value over the amounts assigned to the assets and liabilities of the investee resulted in recording goodwill in the amount of $ 346,000 on the acquisition date.

Effective June 1, 2019, the Company expanded its controlled operations through an acquisition of the remaining ownership interest of a 60 -bed memory care facility in St.

Peters, Missouri.

We previously held a noncontrolling interest in the facility and accounted for the investment as an equity method investment.

The operating results of the business have been included in the accompanying interim condensed consolidated financial statements since the remaining ownership interest acquisition date.

Upon acquiring the remaining ownership interest, the Company recorded and increased its previously held equity interest up to fair value as of the acquisition date.

This remeasurement of our equity interest at fair value resulted in a gain of $ 1,975,000 during the second quarter of 2019.

The gain was recorded in "Non-operating income" in the interim condensed consolidated statements of operations.

Note 7 –

11 unchanged sentences

The following table sets forth the Company’s unaudited interim condensed consolidated statements of operations by business segment (in thousands ):

Three Months Ended September 30, 2020

Revenues and grant income:

Three Months Ended March 31, 2021

Net patient revenues

17 unchanged sentences

145,130  

151,564  

Other operating

11 unchanged sentences

14,769  

15,222  

Non-operating income

Unrealized losses on marketable equity securities

Unrealized gains on marketable equity securities

Income before income taxes

3 unchanged sentences

$ 28,541  

Three Months Ended September 30, 2019

Three Months Ended March 31, 2020

Net patient revenues

24 unchanged sentences

240,319  

240,499  

Income (loss) from operations

Non-operating income

Unrealized gains on marketable equity securities

Income (loss) before income taxes

$ 9,484  

$ 13,623  

$ 22,543  

Nine Months Ended September 30, 2020

Revenues and grant income:

Net patient revenues

$ 659,585  

$ 37,564  

$ 697,149  

Other revenues

33,818  

34,463  

Government stimulus income

34,754  

36,780  

Net operating revenues and grant income

694,984  

39,590  

33,818  

768,392  

Costs and expenses:

Salaries, wages, and benefits

403,840  

24,490  

27,617  

455,947  

Other operating

194,170  

11,471  

213,416  

25,134  

30,972  

Depreciation and amortization

28,826  

31,531  

Total costs and expenses

653,043  

37,578  

42,395  

733,016  

Income (loss) from operations

Income from operations

12,771  

1 unchanged sentence

Non-operating income

20,578  

Unrealized losses on marketable equity securities

1 unchanged sentence

$ 12,771  

$ 2,012  

$ 15,374  

Nine Months Ended September 30, 2019

Net patient revenues

$ 664,768  

$ 41,697  

$ 706,465  

Other revenues

35,366  

36,038  

Net operating revenues

665,440  

41,697  

35,366  

742,503  

Costs and expenses:

Salaries, wages, and benefits

390,770  

25,136  

25,535  

441,441  

Other operating

183,602  

13,193  

203,760  

24,754  

30,602  

Depreciation and amortization

28,790  

31,515  

Total costs and expenses

628,895  

39,912  

41,155  

709,962  

Income (loss) from operations

36,545  

32,541  

Non-operating income

20,936  

Unrealized gains on marketable equity securities

16,096  

Income before income taxes

$ 36,545  

$ 1,785  

$ 31,243  

$ 69,573  

Note 8 –

1 unchanged sentence

Operating Leases

At September 30, 2020, we leased from NHI the real property of 35 skilled nursing facilities, seven assisted living centers and three independent living centers under two separate lease agreements.

At March 31, 2021, we leased from NHI the real property of 35 skilled nursing facilities, seven assisted living centers and three independent living centers under two separate lease agreements.

As part of the first lease agreement, we sublease four Florida skilled nursing facilities to a third -party operator.

Base rent expense under both NHI lease agreements totals $ 34,200,000 annually with rent thereafter escalating by 4 % of the increase in facility revenue over a base year.

Total facility rent expense to NHI was $ 9,655,000 and $ 28,965,000 for the three months and nine months ended September 30, 2020.

Total facility rent expense to NHI was $ 9,515,000 and $ 28,545,000 for the three months and nine months ended September 30, 2019.

Total facility rent expense to NHI was $ 9,411,000 and $ 9,655,000 for the three months ended March 31, 2021 and 2020, respectively.

Finance Leases

At September 30, 2020, we leased and operated three senior healthcare facilities in the state of Missouri under three separate lease agreements.

At March 31, 2021, we leased and operated three senior healthcare facilities in the state of Missouri under three separate lease agreements.

Two of the healthcare facilities are skilled nursing facilities that also include assisted living facilities and the third healthcare facility is a memory care facility.

2 unchanged sentences

Minimum Lease Payments

The following table summarizes the maturity of our finance and operating lease liabilities as of September 30, 2020 ( in thousands ):

The following table summarizes the maturity of our finance and operating lease liabilities as of March 31, 2021 ( in thousands ):

$ 5,200  

22 unchanged sentences

Three Months Ended

Nine Months Ended

Weighted average common shares outstanding

1 unchanged sentence

15,294,777  

15,304,235  

15,267,250  

Net income attributable to National HealthCare Corporation

$ 12,849  

$ 19,461  

$ 14,321  

$ 54,441  

Earnings per common share, basic

$ 0.84  

$ 1.27  

Net income/(loss) attributable to National HealthCare Corporation

$ 21,267  

Earnings/(loss) per common share, basic

$ 1.39  

2 unchanged sentences

15,294,777  

15,304,235  

15,267,250  

Effects of dilutive instruments

62,556  

97,908  

64,540  

83,058  

Weighted average common shares outstanding

1 unchanged sentence

15,294,777  

15,368,775  

15,350,308  

Net income attributable to National HealthCare Corporation

$ 12,849  

$ 19,461  

$ 14,321  

$ 54,441  

Earnings per common share, diluted

$ 0.84  

$ 1.27  

Net income/(loss) attributable to National HealthCare Corporation

$ 21,267  

Earnings/(loss) per common share, diluted

$ 1.38  

In the above table, options to purchase 698,080 shares of our common stock have been excluded for the nine months ended September 30, 2020 due to their anti-dilutive impact.

In the above table, options to purchase 634,780 shares of our common stock have been excluded for the three months ended March 31, 2021 due to their anti-dilutive impact.   

Note 10 –

5 unchanged sentences

Refer to Note 11 for a description of the Company's methodology for determining the fair value of marketable securities.

Marketable securities and restricted marketable securities consist of the following (in thousands) :

September 30, 2020

Marketable securities consist of the following (in thousands) :

March 31, 2021

December 31, 2020

5 unchanged sentences

$ 128,590  

Corporate debt securities

26,540  

26,420  

25,812  

25,778  

Asset-backed securities

Treasury securities

19,148  

19,123  

19,519  

19,504  

Restricted investments available for sale:

Marketable equity securities

Corporate debt securities

23 unchanged sentences

Included in the marketable equity securities are the following (in thousands, except share amounts):

September 30, 2020

March 31, 2021

December 31, 2020

7 unchanged sentences

The amortized cost and estimated fair value of debt securities classified as available for sale, by contractual maturity, are as follows (in thousands) :

September 30, 2020

March 31, 2021

December 31, 2020

13 unchanged sentences

36,685  

Over 10 years

$ 185,217  

2 unchanged sentences

$ 189,835  

Gross unrealized gains related to marketable equity securities are $ 81,804,000 and $ 122,290,000 as of September 30, 2020 and December 31, 2019, respectively.

Gross unrealized losses related to marketable equity securities are $ 107,000 and $ 13,000 as of September 30, 2020 and December 31, 2019, respectively.

For the three months and nine months ended September 30, 2020, the Company recognized net unrealized losses of $ 241,000 and $ 40,580,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

For the three months and nine months ended September 30, 2019, the Company recognized net unrealized gains of $ 9,312,000 and $ 16,096,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

Gross unrealized gains related to available for sale marketable debt securities are $ 6,727,000 and $ 3,407,000 as of September 30, 2020 and December 31, 2019, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 738,000 and $ 167,000 as of September 30, 2020 and December 31, 2019, respectively.

Gross unrealized gains related to marketable equity securities are $ 105,464,000 and $ 98,445,000 as of March 31, 2021 and December 31, 2020, respectively.

Gross unrealized losses related to marketable equity securities are $ 94,000 and $ 134,000 as of March 31, 2021 and December 31, 2020, respectively.

For the three months ended March 31, 2021 and 2020, the Company recognized a net unrealized gain of $ 7,059,000 and a net unrealized loss of $ 60,392,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

Gross unrealized gains related to available for sale marketable debt securities are $ 4,973,000 and $ 6,759,000 as of March 31, 2021 and December 31, 2020, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 1,015,000 and $ 361,000 as of March 31, 2021 and December 31, 2020, respectively.

The Company’s unrealized losses in our available for sale marketable debt securities were determined to be non-credit related.

The Company has not recognized any credit related impairments for the nine months ending September 30, 2020 and 2019.

The Company has not recognized any credit related impairments for the three months ending March 31, 2021 and 2020.

For the marketable securities in gross unrealized loss positions, (a) it is more likely than not that the Company will not be required to sell the investment securities before recovery of the unrealized losses, and (b) the Company expects that the contractual principal and interest will be received on the investment securities.

Proceeds from the sale of available for sale marketable debt securities during the nine months ended September 30, 2020 and 2019 were $ 28,004,000 and $ 41,272,000 , respectively.

Investment gains of $ 135,000 and $ 117,000 were realized on these sales during the nine months ended September 30, 2020 and 2019, respectively.

No sales were reported for marketable equity securities for the nine months ended September 30, 2020 and 2019, respectively.

Proceeds from the sale of available for sale marketable debt securities during the three months ended March 31, 2021 and 2020 were $ 6,086,000 and $ 3,410,000 , respectively.

No investment gains were reported on these sales during the three months ended March 31, 2021 and $ 2,000 of investment gains were realized on these sales during the three months ended March 31, 2020.

No sales were reported for marketable equity securities for the three months ended March 31, 2021 and 2020, respectively.

Note 11 –

4 unchanged sentences

The following summarizes the three levels of inputs that may be used to measure fair value:

– The valuation is based on quoted prices in active markets for identical instruments.

– The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model–based valuation techniques for which all significant assumptions are observable in the market.

The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument.

1  – The valuation is based on quoted prices in active markets for identical instruments.

2  – The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model–based valuation techniques for which all significant assumptions are observable in the market.

3  – The valuation is based on unobservable inputs that are supported by minimal or no market activity and that are significant to the fair value of the instrument.

Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar techniques that incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument, or valuations that require significant management judgment or estimation.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following table summarizes fair value measurements by level at September 30, 2020 and December 31, 2019 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

The following table summarizes fair value measurements by level at March 31, 2021 and December 31, 2020 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

September 30, 2020

March 31, 2021

For Identical

27 unchanged sentences

December 31, 2020

Quoted Prices in

Active Markets

For Identical

12 unchanged sentences

35,253  

Asset - backed securities

Asset–backed securities

44,249  

10 unchanged sentences

$ 92,400  

Note 12 –

Long–Term Debt

Long–term debt consists of the following (dollars in thousands) :

September 30,

Credit facility, interest payable monthly

$ 10,000  

Less current portion

Total long-term debt

On August 13, 2020, NHC terminated the credit facility.

At September 30, 2020, the Company does not have a credit facility in place.

Note 12 - Stock Repurchase Program

In August 2020, the Board of Directors authorized a common stock purchase program.

The program allows for repurchases of up to $ 25 million of its common stock.

During the nine months ended September 30, 2020, the Company repurchased 797 shares of its common stock for a total cost of $ 53,000 .

During the three months ended March 31, 2021, the Company repurchased 3,936 shares of its common stock for a total cost of $ 278,000 .

The shares were funded from cash on hand and were cancelled and returned to the status of authorized but unissued.

The plan expires on August 31, 2021.

Note 13 –

Stock–Based Compensation

Stock –

Based Compensation

NHC recognizes stock–based compensation expense for all stock options granted over the requisite service period using the fair value at the date of grant using the Black–Scholes pricing model.

Stock–based compensation totaled $ 518,000 and $ 340,000 for the three months ended September 30, 2020 and 2019, respectively.

Stock-based compensation totaled $ 1,807,000 and $ 1,448,000 for the nine months ended September 30, 2020 and 2019, respectively.

Stock–based compensation totaled $ 496,000 and $ 466,000 for the three months ended March 31, 2021 and 2020, respectively.

Stock–based compensation is included in “Salaries, wages and benefits”

in the interim condensed consolidated statements of operations.

At September 30, 2020, the Company had $ 3,024,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

At March 31, 2021, the Company had $ 2,637,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

This unrecognized compensation cost will be amortized over an approximate two -year period.

Stock Options

The following table summarizes the significant assumptions used to value the options granted for the nine months ended September 30, 2020 and for the year ended December 31, 2019.

September 30,

The following table summarizes the significant assumptions used to value the options granted for the three months ended March 31, 2021 and for the year ended December 31, 2020.

March 31, 2021

Risk–free interest rate

8 unchanged sentences

2.91 %  

The following table summarizes our outstanding stock options for the nine months ended September 30, 2020 and for the year ended December 31, 2019.

The following table summarizes our outstanding stock options for the three months ended March 31, 2021 and for the year ended December 31, 2020.

Exercise Price

12 unchanged sentences

Options cancelled

Options outstanding at September 30, 2020

Options outstanding at March 31, 2021

755,760  

1 unchanged sentence

$ 4,541,600  

Options exercisable at September 30, 2020

Options exercisable at March 31, 2021

210,686  

1 unchanged sentence

$ 767,000  

September 30, 2020

March 31, 2021

Exercise Prices

9 unchanged sentences

Note 14 –

The Company's income tax provision as a percentage of our income before income taxes was 3.0 % and 5.2 % for the three and nine months ended September 30, 2020, respectively. 

The income tax provision as a percentage of income before income taxes was 14 % and 22.0 % for the three and nine months ended September 30, 2019, respectively.  

The Company's income tax provision as a percentage of our income before income taxes was 25.3 % and 26.4 % for the three months ended March 31, 2021 and 2020, respectively. 

Typically, these percentages vary from the U.S.

federal statutory income tax rate of 21% primarily due to state income taxes, excess tax benefits from stock-based compensation, benefits resulting from the lapsing of statute of limitations of items in our tax contingency reserve, and non-deductible expenses. 

The tax benefit related to statute of limitation expirations was $ 2,234,000 for the three and nine months ended September 30, 2020. 

The tax benefit related to statute of limitation expirations was $ 2,064,000 for the three and nine months ended September 30, 2019.

For the three months ended March 31, 2021 and 2020, the accrual of state income taxes was the only significant reconciling item.

Our quarterly income tax provision, and our estimate of our annual effective income tax rate, is subject to variation due to several factors, including volatility based on the amount of pre-tax income or loss.  

6 unchanged sentences

compensation and general and professional liability insurance claims both for our owned and leased entities and certain of the entities to which we provide management or accounting services.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 105,953,000 and $ 96,011,000 at September 30, 2020 and December 31, 2019, respectively.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 101,481,000 and $ 99,537,000 at March 31, 2021 and December 31, 2020, respectively.

The liability is included in accrued risk reserves in the interim condensed consolidated balance sheets and is subject to adjustment for actual claims incurred.

18 unchanged sentences

In addition, the long–term care industry is continuously subject to scrutiny by governmental regulators, which could result in litigation or claims related to regulatory compliance matters.

Nutritional Support Services, L.P., Qui Tam Litigation 

On June 19, 2018, a First Amended Complaint was filed naming Nutritional Support Services, L.P.

(“NSS”), a wholly owned subsidiary of the Company, as a defendant in the action captioned U.S.

Nutritional Support Services, L.P., No.

6:17 -cv- 2608 -AMQ (D.S.C.), which was filed in the United States District Court for the District of South Carolina (the "Court").

The action alleges that NSS violated the False Claims Act by reporting a National Drug Code (“NDC”) number that did not correspond to the NDC for dispensed prescriptions.

The plaintiffs were seeking unspecified damages.

On April 16, 2018, the United States filed a Notice of Election to Decline Intervention with respect to the allegations asserted in this action.

On March 14, 2020, the Court entered an Order granting the Defendant’s Motion to Dismiss. 

On May 6, 2020, the Court entered a Final Judgment dismissing the case.

Governmental Regulations

4 unchanged sentences

however, the full benefit of any such programs would not be realized until these payments are fully implemented, government agencies issue applicable regulations, or guidance and such relief is provided.

Divestiture of Skilled Nursing Facility

On August 21, 2020, the Company entered into a definitive agreement for the sale of the real estate and operations of a skilled nursing facility in Town and Country, Missouri. 

This transaction is expected to be completed in the fourth quarter of 2020.

Note 17  –

Subsequent Event

Provider Relief Funds Guidance

On September 19, 2020, HHS issued a six -page Post-Payment Notice of Reporting Requirements ( "September 19, 2020 Notice") pertaining to the guidance and reporting process for recipients of Provider Relief Funds. 

This September 19, 2020 Notice was used to estimate the government stimulus income recorded in the interim condensed consolidated statements of operations for the three and nine months ended 

September 30, 2020. 

October 22, 2020, HHS issued a subsequent Post-Payment Notice of Reporting Requirements ( "October 22, 2020 Notice") document that materially revises the definition of lost revenues compared to the September 19, 2020 Notice. 

The definition of lost revenues has subsequently changed to refer to the negative year-over-year difference in 2019 and 2020 actual revenues from patient care related sources as opposed to the negative year-over-year change in net patient care operating income. 

As stated in Note 3,  the Company's estimate for recording government stimulus income for the three and nine months ended 

September 30, 2020 has 

not been updated for the October 22, 2020 Notice. 

The Company's evaluation of the October 22, 2020 Notice is ongoing and its impact on our financial statements is 

not yet known. 

GAAP does not permit amounts recognized as of September 30, 2020 to be updated on the basis of new information in the October 22, 2020 Notice.    

As evidenced by the October 22, 2020 Notice, HHS' interpretation of the underlying terms and conditions of these Provider Relief Fund payments, including auditing and reporting requirements, continues to change and evolve. 

Additional guidance or new and amended interpretations of existing guidance on the terms and conditions may result in changes in the Company's estimates, and such changes may be material. 

Additionally, any such changes may result in the Company's inability to recognize additional Provider Relief Fund payments or may result in derecognition of amounts previously recognized, which may be material.  

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements