What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 169 added, 177 removed, 1246 unchanged (22% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

(unaudited)          

Three Months Ended

Six Months Ended

Nine Months Ended

Revenues and grant income:

49 unchanged sentences

35,376  

28,354  

Other income/(losses):

Other income:

Non–operating income

3 unchanged sentences

95,202  

Unrealized (losses)/gains on marketable equity securities

20,053  

Income before income taxes

108,094  

38,556  

136,635  

Income tax provision

Unrealized losses on marketable equity securities

Income/(loss) before income taxes

13,259  

1 unchanged sentence

15,374  

Net income attributable to noncontrolling interest

Net income attributable to National HealthCare Corporation

Income tax (provision)/benefit

Net income/(loss)

12,868  

1 unchanged sentence

14,574  

Net (income)/loss attributable to noncontrolling interest

Net income/(loss) attributable to National HealthCare Corporation

$ 12,849  

Earnings per share attributable to National HealthCare Corporation stockholders:

$ 122,802  

$ 14,321  

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

$ 0.84  

24 unchanged sentences

Three Months Ended

Six Months Ended

$ 105,330  

$ 28,522  

$ 126,638  

$ 1,706  

Other comprehensive income:

Nine Months Ended

Net income/(loss)

Other comprehensive income/(loss):

Unrealized gains/(losses) on investments in marketable debt securities

2 unchanged sentences

Other comprehensive income/(loss), net of tax

Net income attributable to noncontrolling interest

Comprehensive income attributable to National HealthCare Corporation

$ 105,036  

$ 32,104  

$ 124,381  

$ 3,240  

Net (income)/loss 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.

83 unchanged sentences

16,068  

Contract liabilities

16 unchanged sentences

14,079  

Other noncurrent liabilities

28 unchanged sentences

in thousands)   

Six Months Ended

Nine Months Ended

Cash Flows From Operating Activities:

7 unchanged sentences

Distributions from unconsolidated investments

Unrealized (gains)/losses on marketable equity securities

10,050  

Gains on sale of marketable debt securities

Unrealized losses on marketable equity securities

23,227  

40,580  

Gains on sales of marketable securities

Gains on acquisitions of equity method investments

13 unchanged sentences

Other current liabilities

11,979  

Other noncurrent liabilities

8 unchanged sentences

Collections of notes receivable

Purchases of marketable securities

Proceeds from sale of marketable securities

Purchases of marketable securities

Proceeds from sale of marketable securities

89,129  

36 unchanged sentences

Stockholders’

Income (Loss)

Balance at January 1, 2021

37 unchanged sentences

$ 913,252  

Other comprehensive loss

Stock–based compensation

Dividends declared to common stockholders ( $0.52 per share)

Balance at September 30, 2021

15,423,240  

$ 230,974  

$ 661,783  

$ 2,766  

$ 6,213  

$ 901,890  

NATIONAL HEALTHCARE CORPORATION

Interim Condensed Consolidated Statements of Stockholders ’

Equity (continued)

(in thousands, except share and per share amounts)

Comprehensive

Stockholders’

Income (Loss)

Balance at January 1, 2020

35 unchanged sentences

$ 769,287  

12,849  

12,868  

Contributions attributable to noncontrolling interest

Other comprehensive income

Stock–based compensation

Shares sold –

options exercised

Dividends declared to common stockholders ( $0.52 per share)

Balance at September 30, 2020

15,359,488  

$ 225,616  

$ 543,460  

$ 4,731  

$ 3,217  

$ 777,177  

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

June 30, 2021

September 30, 2021

(unaudited)  

3 unchanged sentences

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

As of June 30, 2021, we operate or manage, through certain affiliates, 75 skilled nursing facilities with a total of 9,473 licensed beds, 24 assisted living facilities, five independent living facilities, one behavioral health hospital, 35 homecare agencies, and 28 hospice agencies.

As of September 30, 2021, we operate or manage, through certain affiliates, 75 skilled nursing facilities with a total of 9,473 licensed beds, 24 assisted living facilities, five independent living facilities, one behavioral health hospital, 34 homecare agencies, and 28 hospice agencies.

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

37 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 $ 1,102,000 and $ 2,021,000 for the three months and six months ended June 30, 2021.

For the three months and six months ended June 30, 2020, bad debt expense was $ 1,245,000 and $ 2,075,000 , respectively.

As of June 30, 2021, and December 31, 2020, the Company has recorded allowance for doubtful accounts of $ 6,841,000 and $ 5,672,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

Bad debt expense was $ 1,452,000 and $ 3,473,000 for the three months and nine months ended September 30, 2021, respectively.

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

As of September 30, 2021, and December 31, 2020, the Company has recorded an allowance for doubtful accounts of $ 7,396,000 and $ 5,672,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

Other Revenues

23 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 $ 4,885,000 and $ 10,254,000  for the three and six months ended June 30, 2021.

General and administrative costs were $ 4,892,000 and $ 10,390,000 for the three months and six months ended June 30, 2020, 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 $ 5,361,000 and $ 15,615,000  for the three and nine months ended September 30, 2021, respectively.

General and administrative costs were $ 5,259,000 and $ 15,649,000 for the three months and nine months ended September 30, 2020, respectively.

Long-Term Leases

54 unchanged sentences

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 June 30, 2021, and December 31, 2020, we have recorded refundable entrance fees in the amount of $ 7,461,000 and $ 7,462,000 , respectively.

As of September 30, 2021, and December 31, 2020, we have recorded refundable entrance fees in the amount of $ 6,868,000 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 June 30, 2021, and December 31, 2020, we have recorded a future service obligation liability in the amount of $2,177,000 .

As of September 30, 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. 

15 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 –

2 unchanged sentences

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

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 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 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.

The Provider Relief Fund grants 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.

The Company recorded $ 15,126,000 and $ 24,648,000 of government stimulus income from the Provider Relief Funds for the three months ended June 30, 2021 and 2020, respectively.

The Company recorded $ 37,875,000  and $ 24,648,000 of government stimulus income from the Provider Relief Funds for the six  months ended June 30, 2021 and 2020, respectively. 

The Company recorded $ 10,429,000 and $ 12,132,000 of government stimulus income from the Provider Relief Funds for the three months ended September 30, 2021 and 2020, respectively.

The Company recorded $ 48,304,000  and $ 36,780,000 of government stimulus income from the Provider Relief Funds for the nine  months ended September 30, 2021 and 2020, respectively. 

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.

1 unchanged sentence

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

As of June 30, 2021, amounts not recognized as income are $ 10,429,000  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 $ 10,429,000  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.

3 unchanged sentences

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.

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

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.

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

As of June 30, 2021, $ 40,121,000 of the accelerated payments remain and is reflected within contract liabilities in the interim condensed consolidated balance sheet.

The recoupment of the accelerated payments began in the second quarter of 2021.

September 30, 2021, we have $ 27,013,000 of the accelerated payments remaining to be recouped and this balance is reflected within contract liabilities in the interim condensed consolidated balance sheet.

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 June 30, 2021.

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

1 unchanged sentence

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 June 30, 2021, we have deferred $ 21,153,000 of the Company’s share of the social security taxes. 

At June 30, 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. 

At September 30, 2021, we have deferred $ 21,153,000 of the Company’s share of the social security taxes. 

At September 30, 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 supplemental Medicaid payments from many of the states in which we operate to help mitigate the incremental costs resulting from the COVID- 19 public health emergency.

We have recorded $ 7,094,000 and $ 3,858,000 in net patient revenues for these supplemental Medicaid payments for the three months ended June 30, 2021 and 2020, respectively.

We have recorded $ 11,049,000 and $ 5,532,000 in net patient revenues for these supplemental Medicaid payments for the six months ended June 30, 2021 and 2020, respectively.

We have recorded $ 5,053,000 and $ 4,845,000 in net patient revenues for these supplemental Medicaid payments for the three months ended September 30, 2021 and 2020, respectively.

We have recorded $ 16,102,000 and $ 10,378,000 in net patient revenues for these supplemental Medicaid payments for the nine months ended September 30, 2021 and 2020, respectively.

Note 4 –

3 unchanged sentences

Caris specializes in providing hospice and palliative care to over 1,250 patients per day in 28 locations in Georgia, Missouri, South Carolina, Tennessee, and Virginia.

As a leading senior care provider, this acquisition is a strategic advancement of our growth that provides a continuum of post-acute health care to seniors in our operational footprint.

As a leading senior care provider, this acquisition is a strategic advancement of our growth that will provide a continuum of post-acute health care to seniors in our operational footprint.

Prior to the June 11, 2021 acquisition date, the Company held a 75.1 % non-controlling equity interest in Caris, which was accounted for as an equity method investment.

2 unchanged sentences

This gain is recorded in the interim condensed consolidated statements of operations under the line item “gains on acquisitions of equity method investments”.

The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation and to determine the fair value of the previously held equity method investment.

The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation and determine the fair value of the previously held equity method investment.

The Company has performed a preliminary valuation analysis of the fair market value of Caris’

assets to be acquired and liabilities to be assumed.

The final valuation of the assets acquired and liabilities assumed was not complete as of June 30, 2021, but will be finalized within the allowable measurement period.

The following table summarizes the allocation of the preliminary assets and liabilities as of the transaction’s closing date ( in thousands ):

assets acquired and liabilities assumed.

The final valuation of the assets acquired, and liabilities assumed was not complete as of September 30, 2021, but will be finalized within the allowable measurement period.

The following table summarizes the allocation of the preliminary purchase price as of the transaction’s closing date ( in thousands ):

Cash and cash equivalents

19 unchanged sentences

146,954  

Total estimated fair value of Caris

Total estimated fair value of the acquisition

$ 177,396  

2 unchanged sentences

We expect approximately 30 %- 40 % of the goodwill to be deductible for income tax purposes.

For the second quarter of 2021, Caris contributed net patient revenues of $ 3,712,000 and income before income taxes of $ 982,000 that are included in the Company’s interim condensed consolidated statements of operations.

The following table contains unaudited pro forma interim condensed consolidated statements of operations information for the three months and six months ended June 30, 2021 and 2020, assuming that the Caris acquisition closed on January 1, 2020.

For the three months ended September 30, 2021, Caris contributed net patient revenues of $ 17,547,000 and income before income taxes of $ 4,660,000 that are included in the Company's interim condensed consolidated statements of operations. 

For the nine months ended September 30, 2021, Caris contributed net patient revenues of $ 21,259,000 and income before income taxes of $ 5,643,000 that are included in the Company’s interim condensed consolidated statements of operations.

The following table contains unaudited pro forma interim condensed consolidated statements of operations information for the three months and nine months ended September 30, 2021 and 2020, assuming that the Caris acquisition closed on January 1, 2020.

The pro forma financial information includes various assumptions, including those related to the preliminary purchase price allocation of assets acquired and liabilities assumed.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Net patient revenues

14 unchanged sentences

Non-operating income

Income before income taxes

10,374  

10,670  

Income (loss) before income taxes

( 7,636 )  

Net income attributable to NHC

14,406  

1 unchanged sentence

17,465  

Net income (loss) attributable to NHC

$ ( 3,348 )  

$ 13,698  

$ 29,002  

$ 15,589  

Note 5 –

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net patient revenues:

4 unchanged sentences

$ 659,585  

Homecare and hospice services

Homecare and hospice

31,933  

18 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Private Pay and Other

7 unchanged sentences

This revenue is recorded on an accrual basis based upon the date of services at amounts equal to its established or estimated per-visit rates.     

For hospice services, Medicare pays a daily rate to cover the hospice’s costs for providing services included in the patient care plan.

For hospice services, Medicare pays a daily rate to cover the costs for providing services included in the patient care plan.

Medicare makes daily payments based on 1 of 4 levels of hospice care.

12 unchanged sentences

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 June 30, 2021 and December 31, 2020, the Company has recorded $ 40,121,000 and $ 51,253,000 , respectively, in contract liabilities related to receipts from the Medicare Accelerated and Advance Payment Program. 

As of September 30, 2021 and December 31, 2020, the Company has recorded $ 27,013,000 and $ 51,253,000 , respectively, 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.

4 unchanged sentences

Payments recouped

Balance at June 30, 2021

Balance at September 30, 2021

$ 27,013  

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 $ 16,931,000 and $ 16,454,000 as of June 30, 2021 and December 31, 2020, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

We have made provisions of approximately $ 17,046,000 and $ 16,454,000 as of September 30, 2021 and December 31, 2020, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

Note 6 –

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Rental income

4 unchanged sentences

Management and accounting services fees

12,703  

12,651  

Insurance services

8 unchanged sentences

Long Term Leases.

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

Three Months Ended

Six Months Ended

Operating lease payments

$ 5,303  

$ 5,505  

$ 10,809  

$ 11,008  

Variable lease payments

Total rental income

$ 5,514  

$ 5,646  

$ 11,161  

$ 11,325  

Management Fees from National Health Corporation

We manage five skilled nursing facilities owned by National Health Corporation (“National”).

For the three and six months ended June 30, 2021, we recognized management fees and interest on management fees of $ 940,000 and $ 1,837,000 from these centers, respectively.

For the three months and six months ended June 30, 2020, we recognized management fees and interest on management fees of $ 941,000 and $ 2,478,000 for these centers, respectively.

For the three and nine months ended September 30, 2021, we recognized management fees and interest on management fees of $ 970,000 and $ 2,806,000 from these centers, respectively.

For the three months and nine months ended September 30, 2020, we recognized management fees and interest on management fees of $ 920,000 and $ 3,399,000 for 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 six months ended June 30, 2021 were $ 766,000 and $ 1,518,000 , respectively.

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, 2021 were $ 780,000 and $ 2,298,000 , respectively.

For workers’

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 six months ended June 30, 2021 were $ 511,000 and $ 1,023,000 , respectively.

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, 2021 were $ 511,000 and $ 1,534,000 , 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".

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Equity in earnings of unconsolidated investments

2 unchanged sentences

$ 8,448  

$ 5,429  

Dividends and net realized gains on sales of securities

25 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 June 30, 2021

Three Months Ended September 30, 2021

Net patient revenues

32 unchanged sentences

12,762  

13,795  

Non-operating income

Gain on acquisition of equity method investment

95,202  

Unrealized losses on marketable equity securities

Income before income taxes

$ 22,661  

$ 3,095  

Income (loss) before income taxes

$ 9,701  

$ 6,832  

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Revenues and grant income:

32 unchanged sentences

10,785  

12,549  

Non-operating income

Unrealized gains on marketable equity securities

20,053  

Unrealized losses on marketable equity securities

Income before income taxes

2 unchanged sentences

$ 1,377  

Six Months Ended June 30, 2021

$ 13,259  

Nine Months Ended September 30, 2021

Revenues and grant income:

25 unchanged sentences

24,641  

30,437  

Depreciation and amortization

9 unchanged sentences

11,672  

41,779  

Non-operating income

4 unchanged sentences

95,202  

Unrealized gains on marketable equity securities

Unrealized losses on marketable equity securities

Income before income taxes

3 unchanged sentences

$ 128,999  

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Revenues and grant income:

25 unchanged sentences

25,134  

30,972  

Depreciation and amortization

12 unchanged sentences

18,870  

Gain on acquisition of equity method investment

Unrealized losses on marketable equity securities

2 unchanged sentences

$ 2,012  

$ 15,374  

Note 9 –

1 unchanged sentence

Operating Leases

At June 30, 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.

At September 30, 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 $ 9,492,000 and $ 18,903,000 for the three and six months ended June 30, 2021.

Total facility rent expense to NHI was $ 9,655,000 and $ 19,310,000 for the three months and six months ended June 30, 2020.

Total facility rent expense to NHI was $ 9,026,000 and $ 28,336,000 for the three and nine months ended September 30, 2021, respectively.

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, respectively.

Finance Leases

At June 30, 2021, we leased and operated three senior healthcare facilities in the state of Missouri under three separate lease agreements.

At September 30, 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 June 30, 2021 ( in thousands ):

The following table summarizes the maturity of our finance and operating lease liabilities as of September 30, 2021 ( in thousands ):

$ 5,200  

21 unchanged sentences

The following table summarizes the earnings and the weighted average number of common shares used in the calculation of basic and diluted earnings per share (in thousands, except for share and per share amounts):

Three Months Ended June 30

Six Months Ended June 30

Three Months Ended

Nine Months Ended

Weighted average common shares outstanding

3 unchanged sentences

15,304,235  

Net income attributable to National HealthCare Corporation

Net income (loss) attributable to National HealthCare Corporation

$ ( 3,348 )  

2 unchanged sentences

$ 14,321  

Earnings per common share, basic

Earnings (loss) per common share, basic

$ ( 0.22 )  

11 unchanged sentences

64,540  

66,523  

Weighted average common shares outstanding

3 unchanged sentences

15,368,775  

Net income attributable to National HealthCare Corporation

Net income (loss) attributable to National HealthCare Corporation

$ ( 3,348 )  

2 unchanged sentences

$ 14,321  

Earnings per common share, diluted

Earnings (loss) per common share, diluted

$ ( 0.22 )  

2 unchanged sentences

$ 0.93  

In the above table, options to purchase 631,905 and 698,421 shares of our common stock have been excluded for the six months ended June 31, 2021 and 2020, respectively, due to their anti-dilutive impact.

In the above table, options to purchase 620,076  and 698,080 shares of our common stock have been excluded for the nine months ended September 31, 2021 and 2020, respectively, due to their anti-dilutive impact.

Note 11 –

6 unchanged sentences

Marketable securities consist of the following (in thousands) :

June 30, 2021

September 30, 2021

December 31, 2020

43 unchanged sentences

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

June 30, 2021

September 30, 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) :

June 30, 2021

September 30, 2021

December 31, 2020

18 unchanged sentences

$ 189,835  

Gross unrealized gains related to marketable equity securities are $ 99,232,000 and $ 98,445,000 as of June 30, 2021 and December 31, 2020, respectively.

Gross unrealized losses related to marketable equity securities are $ 351,000 and $ 134,000 as of June 30, 2021 and December 31, 2020, respectively.

For the three months and six months ended June 30, 2021, the Company recognized a net unrealized loss of $ 6,489,000 and a net unrealized gain of $ 570,000 , 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 six months ended June 30, 2020, the Company recognized net unrealized gains of $ 20,053,000 and net unrealized losses of $ 40,339,000 , 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 $ 4,806,000 and $ 6,759,000 as of June 30, 2021 and December 31, 2020, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 653,000 and $ 361,000 as of June 30, 2021 and December 31, 2020, respectively.

Gross unrealized gains related to marketable equity securities are $ 76,151,000 and $ 98,445,000 as of September 30, 2021 and December 31, 2020, respectively.

Gross unrealized losses related to marketable equity securities are $ 1,067,000 and $ 134,000 as of September 30, 2021 and December 31, 2020, respectively.

For the three months and nine months ended September 30, 2021, the Company recognized net unrealized losses of $ 23,797,000 and $ 23,227,000 , 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, 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.

Gross unrealized gains related to available for sale marketable debt securities are $ 4,288,000 and $ 6,759,000 as of September 30, 2021 and December 31, 2020, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 796,000 and $ 361,000 as of September 30, 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 three months or six months ending June 30, 2021 and 2020.

The Company has not recognized any credit related impairments for the three months or nine months ending September 30, 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 six months ended June 30, 2021 and 2020 were $ 44,939,000 and $ 19,823,000 , respectively.

Investment gains of $ 212,000 and $ 13,000 were realized on these sales during the six months ended June 30, 2021 and 2020, respectively.

No sales were reported for marketable equity securities for the six months ended June 30, 2021 and 2020, respectively.

Proceeds from the sale of marketable securities during the nine months ended September 30, 2021 and 2020 were $ 89,129,000 and $ 28,004,000 , respectively.

Investment gains of $ 941,000 and $ 135,000 were realized on these sales during the nine months ended September 30, 2021 and 2020, respectively.

Note 12 –

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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 June 30, 2021 and December 31, 2020 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

The following table summarizes fair value measurements by level at September 30, 2021 and December 31, 2020 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

June 30, 2021

September 30, 2021

For Identical

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December 31, 2020

Quoted Prices in

Active Markets

For Identical

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Goodwill and Other Intangible Assets

At June 30, 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 June 30, 2021 that required a quantitative test to be performed.

At September 30, 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 September 30, 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.

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for further detail describing the goodwill addition in 2021.

At June 30, 2021, the following table represents the activity related to our goodwill by segment ( in thousands ):

Homecare and Hospice

At September 30, 2021, the following table represents the activity related to our goodwill by segment ( in thousands ):

January 1, 2021

$ 3,741  

$ 17,600  

$ 21,341  

146,954  

June 30, 2021

$ 3,741  

$ 164,554  

$ 168,295  

September 30, 2021

As part of the Caris acquisition, we also recorded indefinite-lived intangible assets that consisted of the trade name ($ 4,340,000 ) and certificates of need and licenses ($ 2,698,000 ).

Note 14 - Stock Repurchase Program

During the six months ended June 30, 2021, the Company repurchased 3,936 shares of its common stock for a total cost of $ 278,000 .

Note 14 - Stock Repurchases

During the nine months ended September 30, 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.

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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 $ 683,000 and $ 823,000 for the three months ended June 30, 2021 and 2020, respectively.

Stock–based compensation totaled $ 1,179,000 and $ 1,289,000 for the six months ended June 30, 2021 and 2020, respectively.

Stock–based compensation totaled $ 726,000 and $ 518,000 for the three months ended September 30, 2021 and 2020, respectively.

Stock–based compensation totaled $ 1,905,000 and $ 1,807,000 for the nine months ended September 30, 2021 and 2020, respectively.

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

in the interim condensed consolidated statements of operations.

At June 30, 2021, the Company had $ 2,494,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

At September 30, 2021, the Company had $ 1,767,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

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

Stock Options

The following table summarizes the significant assumptions used to value the options granted for the six months ended June 30, 2021 and for the year ended December 31, 2020.

The following table summarizes the significant assumptions used to value the options granted for the nine months ended September 30, 2021 and for the year ended December 31, 2020.

September 30,

Risk–free interest rate

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3.01 %  

The following table summarizes our outstanding stock options for the six months ended June 30, 2021 and for the year ended December 31, 2020.

The following table summarizes our outstanding stock options for the nine months ended September 30, 2021 and for the year ended December 31, 2020.

Exercise Price

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Options cancelled

Options outstanding at June 30, 2021

Options outstanding at September 30, 2021

768,851  

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$ 656,425  

Options exercisable at June 30, 2021

Options exercisable at September 30, 2021

177,686  

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$ 587,578  

June 30, 2021

September 30, 2021

Exercise Prices

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Note 16 –

The Company's income tax provision as a percentage of our income before income taxes was 2.6 % and 26.0 % for the three months ended June 30, 2021 and 2020, respectively. 

The Company's income tax provision as a percentage of our income before income taxes was 7.3 % and 19.4 % for the six months ended June 30, 2021 and 2020, respectively. 

The Company's income tax benefit as a percentage of our loss before income taxes was 53.6 % for the three months ended September 30, 2021. 

The Company's income tax provision as a percentage of our income before income taxes was 

3.0 % for the three months ended September 30, 2020. 

The Company's income tax provision as a percentage of our income before income taxes was 4.6 % and 5.2 % for the nine months ended September 30, 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.

For the three months and six months ended June 30, 2021, the income tax provision and effective tax rate were favorably impacted by the nontaxable gain recognized upon re-measurement of our existing equity investment in Caris Healthcare, L.P.

The tax benefit related to the statute of limitation expirations was $ 1,444,000 for the three and nine months ended September 30, 2021.

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

For the nine months ended September 30, 2021 the income tax provision and effective tax rate were favorably impacted by the nontaxable gain recognized upon re-measurement of our existing equity investment in Caris Healthcare, L.P.

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.  

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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 $ 101,850,000 and $ 99,537,000 at June 30, 2021 and December 31, 2020, respectively.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 103,824,000 and $ 99,537,000 at September 30, 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.

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The United States declined intervention on March 1, 2021.

Thereafter, the Plaintiff filed an amended Complaint against Dr.

Thereafter, the Plaintiff filed an amended Complaint and then a second amended complaint (the "Complaint") against Dr.

Sanja Malhotra, Integrated Behavioral Health, Inc.

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Malhotra had nurse practitioners providing free services in the facilities in exchange for referrals to entities he owned or in which he had a financial interest in violation of the False Claims Act and Anti-Kickback Statute.

NHC Healthcare/Moulton, LLC denies the allegations and is vigorously defending the claim.

A motion to dismiss has been filed and is pending.

NHC Healthcare/Moulton, LLC denies the allegations and is vigorously defending the claim. 

Governmental Regulations

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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