What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-05 compared with 2021-11-04 · 139 added, 704 removed, 711 unchanged (54% of the section changed)

5 unchanged sentences

Three Months Ended

Nine Months Ended

Revenues and grant income:

Net patient revenues

$ 254,817  

$ 227,383  

$ 708,648  

$ 697,149  

Other revenues

11,491  

11,111  

33,916  

34,463  

Government stimulus income

10,429  

12,132  

48,304  

36,780  

Net operating revenues and grant income

276,737  

250,626  

790,868  

768,392  

Cost and expenses:

Salaries, wages, and benefits

159,305  

151,564  

461,239  

455,947  

Other operating

84,039  

70,887  

226,235  

213,416  

Facility rent

10,204  

10,320  

30,437  

30,972  

Depreciation and amortization

10,229  

10,548  

30,521  

31,531  

Total costs and expenses

263,975  

243,604  

749,089  

733,016  

Income from operations

12,762  

41,779  

35,376  

Other income:

Non–operating income

15,245  

18,870  

Gains on acquisitions of equity method investments

95,202  

Unrealized losses on marketable equity securities

Income/(loss) before income taxes

13,259  

128,999  

15,374  

Income tax (provision)/benefit

Net income/(loss)

12,868  

123,092  

14,574  

Net (income)/loss attributable to noncontrolling interest

Net income/(loss) attributable to National HealthCare Corporation

$ 12,849  

$ 122,802  

$ 14,321  

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

$ 0.84  

$ 8.00  

$ 0.94  

$ 0.84  

$ 7.97  

$ 0.93  

Unrealized gains on marketable equity securities

Income before income taxes

Income tax provision

Net income attributable to noncontrolling interest

Net income attributable to National HealthCare Corporation

Earnings per share attributable to National HealthCare Corporation stockholders:

Weighted average common shares outstanding:

15,364,043  

15,310,754  

15,347,042  

15,304,235  

15,364,043  

15,371,311  

15,414,683  

15,368,775  

Dividends declared per common share

$ 0.52  

$ 1.56  

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

4 unchanged sentences

Three Months Ended

Nine Months Ended

Net income/(loss)

Other comprehensive income/(loss):

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

Other comprehensive loss:

Unrealized losses on investments in marketable debt securities

Reclassification adjustment for realized gains on sales of marketable debt securities

Income tax (expense)/benefit related to items of other comprehensive income

Other comprehensive income/(loss), net of tax

Net (income)/loss attributable to noncontrolling interest

Comprehensive income/(loss) attributable to National HealthCare Corporation

Income tax benefit related to items of other comprehensive income

Other comprehensive loss, net of tax

Net income attributable to noncontrolling interest

Comprehensive income 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)

March 31, 2022

Current Assets:

Cash and cash equivalents

$ 112,462  

$ 147,093  

Restricted cash and cash equivalents, current portion

12,506  

Marketable equity securities

105,893  

128,590  

Marketable debt securities

36,590  

47,762  

Restricted marketable equity securities

24,520  

Restricted marketable debt securities, current portion

18,794  

16,601  

Accounts receivable

99,019  

89,670  

Prepaid expenses and other assets

Notes receivable, current portion

Total current assets

424,829  

456,755  

Property and Equipment:

Property and equipment, at cost

1,062,620  

1,030,426  

Accumulated depreciation and amortization

Net property and equipment

522,019  

520,318  

Other Assets:

1 unchanged sentence

Restricted marketable debt securities, less current portion

118,737  

125,472  

Deposits and other assets

Operating lease right-of-use assets

162,550  

179,055  

168,295  

21,341  

Intangible assets

Notes receivable, less current portion

12,093  

Investments in unconsolidated companies

40,782  

Total other assets

468,950  

385,059  

$ 1,415,798  

$ 1,362,132  

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

2 unchanged sentences

(in thousands, except share and per share amounts)

March 31, 2022

Liabilities and Stockholders ’

20 unchanged sentences

Provider relief funds

16,068  

Contract liabilities

15,022  

51,253  

Dividends payable

3 unchanged sentences

Finance lease obligations, less current portion

10,540  

Operating lease liabilities, less current portion

6 unchanged sentences

Deferred income taxes

14,079  

Other noncurrent liabilities

13 unchanged sentences

669,078  

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Total National HealthCare Corporation stockholders’

12 unchanged sentences

in thousands)   

Nine Months Ended

Three Months Ended

Cash Flows From Operating Activities:

$ 123,092  

$ 14,574  

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

Adjustments to reconcile net income to net cash (used in)/provided by operating activities:

Depreciation and amortization

30,521  

31,531  

Equity in earnings of unconsolidated investments

Distributions from unconsolidated investments

10,050  

Unrealized losses on marketable equity securities

23,227  

40,580  

Gains on sales of marketable securities

Gains on acquisitions of equity method investments

Unrealized gains on marketable equity securities

Gains on sale of marketable securities

Deferred income taxes

8 unchanged sentences

Provider relief funds

21,404  

Contract liabilities

51,253  

Other current liabilities

Other noncurrent liabilities

Net cash provided by operating activities

46,871  

183,900  

Net cash (used in)/provided by operating activities

Cash Flows From Investing Activities:

Purchases of property and equipment

Acquisitions of equity method investments, net of cash acquired

Investments in unconsolidated companies

Investments in notes receivable

Collections of notes receivable

Purchases of marketable securities

Proceeds from sale of marketable securities

89,129  

28,004  

Purchases of marketable securities

Proceeds from sale of marketable securities

Net cash used in investing activities

Cash Flows From Financing Activities:

Borrowings under credit facility

40,000  

Repayments under credit facility

Principal payments under finance lease obligations

3 unchanged sentences

Repurchase of common shares

Entrance fee (refunds) deposits

Entrance fee refunds

Net cash used in financing activities

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

135,108  

Net Decrease in Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

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

158,502  

61,010  

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, End of Period

$ 126,767  

$ 196,118  

Balance Sheet Classifications:

Cash and cash equivalents

$ 112,462  

$ 183,765  

Restricted cash and cash equivalents

14,305  

12,353  

Total Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

$ 126,767  

$ 196,118  

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

28 unchanged sentences

810,188  

104,883  

105,330  

Contributions attributable to noncontrolling interest

Other comprehensive income

Stock–based compensation

Shares sold –

options exercised

33,100  

Dividends declared to common stockholders ( $0.52 per share)

Balance at June 30, 2021

15,423,240  

$ 230,248  

$ 673,151  

$ 3,288  

$ 6,411  

$ 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

7 unchanged sentences

$ 5,456  

Net (loss) income

Contributions attributable to noncontrolling interest

Other comprehensive loss

Stock–based compensation

Shares sold –

options exercised

$ 908,460  

Repurchase of common shares

Dividends declared to common stockholders ( $0.52 per share)

Balance at March 31, 2020

15,318  

15,349  

$ 518,261  

$ 743,355  

28,324  

28,522  

Contributions attributable to noncontrolling interest

Other comprehensive income

Equity contributed by noncontrolling interest

Other comprehensive loss

Stock–based compensation

4 unchanged sentences

Dividends declared to common stockholders ($ 0.55 per share)

Balance at June 30, 2020

15,357,488  

$ 224,972  

$ 538,599  

$ 4,328  

$ 1,235  

$ 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  

Balance at March 31, 2022

15,471,331  

6 unchanged sentences

Notes to Interim Condensed Consolidated Financial Statements

September 30, 2021

March 31, 2022

(unaudited)  

3 unchanged sentences

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

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.

As of March 31, 2022, we operate or manage, through certain affiliates, 75 skilled nursing facilities with a total of 9,456 licensed beds, 24 assisted living facilities, five independent living facilities, one behavioral health hospital, 35 homecare agencies, and 29 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 $ 1,452,000 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.

Bad debt expense was $ 2,536,000 and $ 919,000 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022, and December 31, 2021, the Company has recorded allowance for doubtful accounts of $ 6,726,000 and $ 6,411,000 , 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 $ 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.

Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation, which were $ 5,787,000 and $ 5,369,000 for the three months ended March 31, 2022 and 2021, respectively.

Long-Term Leases

4 unchanged sentences

We determine the lease term by assuming exercise of renewal options that are reasonably certain.

The Company records right-of-use assets and liabilities on the interim condensed consolidated balance sheets for non-cancelable real estate operating leases with original or remaining lease terms in excess of one year.

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.

The Company records right-of-use assets and liabilities for non-cancelable real estate operating leases with original or remaining lease terms in excess of one year.

Leases with a lease term of 12 months or less at inception are not recorded and are expensed on a straight-line basis over the lease term.

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

46 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 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.

As of March 31, 2022, and December 31, 2021, we have recorded refundable entrance fees in the amount of $ 6,097,000 and $ 7,011,000 , 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, 2021, and December 31, 2020, we have recorded a future service obligation liability in the amount of $ 2,177,000 .

As of March 31, 2022, and December 31, 2021, we have recorded a future service obligation liability in the amount of $ 2,338,000 .

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

13 unchanged sentences

The Company's maximum exposure to losses in its investments in unconsolidated VIEs cannot be quantified and may or may not be limited to its investment in the unconsolidated VIE.

The investments in unconsolidated VIEs are classified as “investments in limited liability companies”

in the consolidated balance sheets.

The investments in unconsolidated VIEs are classified as “investments in unconsolidated companies”

in the interim condensed consolidated balance sheets.

Reclassifications

Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements. 

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 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 $ 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 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 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 are used for healthcare-related expenses or lost revenue attributable to COVID- 19.

The Company recorded $ 10,620,000 and $ 22,749,000 of government stimulus income from the Provider Relief Funds for the three months ended March 31, 2022 and 2021, 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.

5 unchanged sentences

These funds are 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 first eleven months after repayment began, repayment occurs through an automatic recoupment of twenty-five 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.

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 September 30, 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.

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

As of March 31, 2022 and December 31, 2021, $ 5,003,000 and $ 15,022,000 , respectively, of the accelerated payments remain and are reflected within contract liabilities in the interim condensed consolidated balance sheet.

The CARES Act and subsequent related legislation temporarily suspended Medicare sequestration beginning May 1, 2020 through March 31, 2022.

The Medicare sequestration policy reduces fee-for-service Medicare payments by 2 percent.

Beginning April 1, 2022, the sequestration reductions will then be 1% from April 1, 2022 through June 30, 2022.

The full 2% reduction is scheduled to go back into effect July 1, 2022.

The CARES Act extends the sequestration policy through 2030 in exchange for this temporary suspension, which the sequestration reduction for 2030 has been increased up to 3%.

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 have been 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 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. 

At March 31, 2022 and December 31, 2021, we have deferred $ 10,545,000 of the Company’s share of the social security taxes included in the current liabilities section of the 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 $ 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 –

Acquisition of Caris HealthCare, L.P.

On June 11, 2021, the Company acquired the remaining 24.9 % equity interest in Caris HealthCare, L.P.

(“Caris”) for a purchase price of approximately $ 28,713,000 , net of cash acquired.

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 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.

The Company accounted for the acquisition of the remaining 24.9 % equity interest of Caris as a step acquisition, which required remeasurement of the Company’s previous 75.1 % ownership interest to fair value.

Using acquisition accounting, the Company increased the value of its previously held equity method investment to its fair value of approximately $ 133.1 million, which resulted in a gain of $ 95.2 million.

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 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 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

$ 15,515  

Restricted cash and cash equivalents

Accounts receivable

10,544  

Prepaid expenses and other assets

Property and equipment

Operating lease –

right-of-use assets

Intangible assets

Total assets acquired

39,891  

Trade accounts payable

Accrued payroll

Other current liabilities

Operating lease liabilities

Other noncurrent liabilities

Total liabilities assumed

Net identifiable assets acquired

30,442  

146,954  

Total estimated fair value of the acquisition

$ 177,396  

The indefinite-lived intangible assets acquired include the trade name of Caris and the certificates of need and licenses.

The goodwill is recorded in the homecare and hospice segment and is attributed to the workforce acquired and reputation of the business as part of the transaction.

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

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.

The pro forma financial information may vary in future quarters based on the final valuations and analysis of the fair value of the assets acquired and liabilities assumed (in thousands) .

Three Months Ended

Nine Months Ended

Net patient revenues

$ 254,817  

$ 243,357  

$ 736,619  

$ 744,762  

Total costs and expenses

263,975  

256,385  

770,295  

770,338  

Income from operations

12,762  

10,215  

48,544  

45,667  

Non-operating income

10,374  

10,670  

Income (loss) before income taxes

( 7,636 )  

14,406  

35,691  

17,465  

Net income (loss) attributable to NHC

$ ( 3,348 )  

$ 13,698  

$ 29,002  

$ 15,589  

We have recorded $ 5,538,000 and $ 3,955,000 in net patient revenues for these supplemental Medicaid payments for the three months ended March 31, 2022 and 2021, respectively.

Note 4 –

5 unchanged sentences

Three Months Ended

Nine Months Ended

Net patient revenues:

Inpatient services

$ 222,884  

$ 214,211  

$ 644,986  

$ 659,585  

Homecare and hospice

31,933  

13,172  

63,662  

37,564  

Total net patient revenue

$ 254,817  

$ 227,383  

$ 708,648  

$ 697,149  

For inpatient and hospice 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

5 unchanged sentences

The services covered by the payment include all disciplines of care, in addition to medical supplies, within the scope of the home health benefit.

Certain managed care payors for homecare services pay on a per-visit basis.

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 costs for providing services included in the patient care plan.

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

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

10 unchanged sentences

For private pay patients in skilled nursing, assisted living and independent living facilities, the Company bills for room and board charges, with the remittance being due on receipt of the statement and generally by the 10th day of the month the services are performed.

Certain managed care payors for homecare services pay on a per-visit basis.

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.     

Contract Liabilities

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 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. 

As of March 31, 2022 and December 31, 2021, the Company has recorded $ 5,003,000 and $ 15,022,000 , 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.

1 unchanged sentence

Balance at December 31, 2021

$ 51,253  

Payments received

Payments recouped

Balance at September 30, 2021

$ 27,013  

Balance at March 31, 2022

Third Party Payors

7 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 $ 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.

We have made provisions of approximately $ 17,319,000 and $ 17,595,000 as of March 31, 2022 and December 31, 2021, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

Note 5 –

4 unchanged sentences

Revenues from insurance services include premiums for workers’

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.

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 (in thousands) .

Three Months Ended

Nine Months Ended

Rental income

$ 5,792  

$ 5,646  

$ 16,954  

$ 16,972  

Management and accounting services fees

12,703  

12,651  

Insurance services

Total other revenues

$ 11,491  

$ 11,111  

$ 33,916  

$ 34,463  

Rental Income

4 unchanged sentences

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

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.

For the three months ended March 31, 2022 and 2021, we recognized management fees and interest on management fees of $ 981,000 and $ 896,000 , respectively, for these centers.

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

For workers’

compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021 were $ 728,000 and $ 753,000 , 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, 2021 were $ 511,000 and $ 1,534,000 , 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, 2022 and 2021 were $ 519,000 and $ 511,000 , 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

Nine Months Ended

Equity in earnings of unconsolidated investments

$ 3,019  

$ 5,320  

$ 8,448  

Dividends and net realized gains on sales of securities

1 unchanged sentence

Total non-operating income

$ 3,399  

$ 6,478  

$ 15,245  

$ 18,870  

Caris HealthCare, L.P.

On June 11, 2021, the Company acquired the remaining 24.9 % equity interest in Caris.

See Note 4 - “Acquisition of Caris HealthCare, L.P.”

for further detail describing the acquisition.

On June 11, 2021, the Company acquired the remaining 24.9 % equity interest in Caris HealthCare, L.P.

(“Caris”).

Prior to the June 11, 2021 acquisition date, Caris was our most significant equity method investment with a 75.1 % non-controlling ownership interest.

14 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, 2021

Net patient revenues

$ 222,884  

$ 31,933  

$ 254,817  

Other revenues

11,363  

11,491  

Government stimulus income

10,429  

Net operating revenues and grant income

233,441  

31,933  

11,363  

276,737  

Costs and expenses:

Salaries, wages, and benefits

131,567  

17,592  

10,146  

159,305  

Other operating

74,506  

84,039  

10,204  

Depreciation and amortization

10,229  

Total costs and expenses

223,740  

25,101  

15,134  

263,975  

Income (loss) from operations

12,762  

Non-operating income

Unrealized losses on marketable equity securities

Income (loss) before income taxes

$ 9,701  

$ 6,832  

Three Months Ended September 30, 2020

Revenues and grant income:

Three Months Ended March 31, 2022

Net patient revenues

$ 214,211  

$ 13,172  

$ 227,383  

Other revenues

11,027  

11,111  

Government stimulus income

12,132  

Net operating revenues and grant income

226,427  

13,172  

11,027  

250,626  

Costs and expenses:

Salaries, wages, and benefits

132,245  

11,109  

151,564  

Other operating

65,066  

70,887  

10,320  

Depreciation and amortization

10,548  

Total costs and expenses

215,642  

12,075  

15,887  

243,604  

Income (loss) from operations

10,785  

Non-operating income

Unrealized losses on marketable equity securities

Unrealized gains on marketable equity securities

Income before income taxes

$ 10,785  

$ 1,097  

$ 1,377  

$ 13,259  

Nine Months Ended September 30, 2021

Revenues and grant income:

Three Months Ended March 31, 2021

Net patient revenues

$ 644,986  

$ 63,662  

$ 708,648  

Other revenues

33,592  

33,916  

Government stimulus income

48,304  

Net operating revenues and grant income

693,614  

63,662  

33,592  

790,868  

Costs and expenses:

Salaries, wages, and benefits

388,949  

36,483  

35,807  

461,239  

Other operating

204,445  

13,730  

226,235  

24,641  

30,437  

Depreciation and amortization

27,790  

30,521  

Total costs and expenses

646,482  

51,990  

50,617  

749,089  

Income/(loss) from operations

47,132  

11,672  

41,779  

Non-operating income

15,245  

Gain on acquisition of equity method investment

95,202  

Unrealized losses on marketable equity securities

Unrealized gains on marketable equity securities

Income before income taxes

$ 47,132  

$ 11,672  

$ 70,195  

$ 128,999  

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

41,941  

35,376  

Non-operating income

18,870  

Gain on acquisition of equity method investment  

Unrealized losses on marketable equity securities

Income (loss) before income taxes

$ 41,941  

$ 2,012  

$ 15,374  

Note 8 –

1 unchanged sentence

Operating Leases

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.

At March 31, 2022, 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 $ 9,026,000 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.

Total facility rent expense to NHI was $ 9,252,000 and $ 9,411,000 for the three months ended March 31, 2022 and 2021, respectively.

Finance Leases

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

At March 31, 2022, 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, 2021 ( in thousands ):

$ 5,200  

$ 36,086  

35,416  

34,943  

34,586  

34,387  

14,300  

The following table summarizes the maturity of our finance and operating lease liabilities as of March 31, 2022 ( in thousands ):

Total minimum lease payments

12,567  

189,718  

amounts representing interest

Present value of future minimum lease payments

11,671  

162,550  

current portion

Noncurrent lease liabilities

$ 7,045  

$ 135,261  

Note 9 –

4 unchanged sentences

Three Months Ended

Nine Months Ended

Weighted average common shares outstanding

15,364,043  

15,310,754  

15,347,042  

15,304,235  

Net income (loss) attributable to National HealthCare Corporation

$ ( 3,348 )  

$ 12,849  

$ 122,802  

$ 14,321  

Earnings (loss) per common share, basic

$ ( 0.22 )  

$ 0.84  

$ 8.00  

$ 0.94  

Net income attributable to National HealthCare Corporation

Earnings per common share, basic

Weighted average common shares outstanding

15,364,043  

15,310,754  

15,347,042  

15,304,235  

Effects of dilutive instruments

60,557  

67,641  

64,540  

Weighted average common shares outstanding

15,364,043  

15,371,311  

15,414,683  

15,368,775  

Net income (loss) attributable to National HealthCare Corporation

$ ( 3,348 )  

$ 12,849  

$ 122,802  

$ 14,321  

Earnings (loss) per common share, diluted

$ ( 0.22 )  

$ 0.84  

$ 7.97  

$ 0.93  

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.

Net income attributable to National HealthCare Corporation

Earnings per common share, diluted

Note 10 –

6 unchanged sentences

Marketable securities consist of the following (in thousands) :

September 30, 2021

March 31, 2022

December 31, 2021

20 unchanged sentences

25,249  

25,442  

26,958  

Corporate debt securities

18 unchanged sentences

312,166  

$ 218,396  

323,105  

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

September 30, 2021

March 31, 2022

December 31, 2021

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, 2021

March 31, 2022

December 31, 2021

18 unchanged sentences

$ 172,100  

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.

Gross unrealized gains related to marketable equity securities are $ 88,514,000 and $ 85,394,000 as of March 31, 2022 and December 31, 2021, respectively.

Gross unrealized losses related to marketable equity securities are $ 939,000 and $ 946,000 as of March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022 and 2021, the Company recognized net unrealized gains of $ 3,126,000 and $ 7,059,000 , 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 $ 484,000 and $ 3,189,000 as of March 31, 2022 and December 31, 2021, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 4,905,000 and $ 1,176,000 as of March 31, 2022 and December 31, 2021, 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 nine months ending September 30, 2021 and 2020.

The Company has not recognized any credit related impairments for the three months ended 

March 31, 2022 and 2021.

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 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.

Proceeds from the sale of marketable securities during the three months ended March 31, 2022 and 2021 were $ 16,946,000 and $ 6,086,000 , respectively.

Investment gains of $ 45,000 were realized on these sales during the three months ended March 31, 2022.

No investment gains were realized on these sales during the three months ended March 31, 2021.

Note 11 –

9 unchanged sentences

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, 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 March 31, 2022 and December 31, 2021 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

September 30, 2021

March 31, 2022

For Identical

Cash and cash equivalents

$ 112,462  

Restricted cash and cash equivalents

14,305  

Marketable equity securities

130,413  

Corporate debt securities

87,691  

45,640  

42,051  

Mortgage–backed securities

36,968  

Treasury securities

39,965  

State and municipal securities

Total financial assets

$ 431,301  

$ 342,785  

$ 88,516  

Fair Value Measurements Using

2 unchanged sentences

Cash and cash equivalents

$ 147,093  

Restricted cash and cash equivalents

11,409  

Marketable equity securities

133,270  

Corporate debt securities

92,025  

56,772  

35,253  

Asset–backed securities

44,249  

Treasury securities

40,663  

State and municipal securities

12,898  

Total financial assets

$ 481,607  

$ 389,207  

$ 92,400  

Note 12 –

Goodwill and Other Intangible Assets

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.

At March 31, 2022, 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, 2022 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.

1 unchanged sentence

If actual results are not consistent with our assumptions and estimates, we may be exposed to future goodwill impairment losses.

See Note 4 –

Acquisition of Caris HealthCare, L.P.

for further detail describing the goodwill addition in 2021.

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

At March 31, 2022, the following table represents the activity related to our goodwill by segment ( in thousands ):

January 1, 2022

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 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.

March 31, 2022

We also have recorded indefinite-lived intangible assets that consist of trade names ($ 4,340,000 ) and certificates of need and licenses ($ 2,698,000 ).

Note 13 - Stock Repurchase Program

During the three months ended March 31, 2022, the Company repurchased 2,165 shares of its common stock for a total cost of $ 146,000 .

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.

Note 14 –

2 unchanged sentences

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 $ 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 totaled $ 712,000 and $ 496,000 for the three months ended March 31, 2022 and 2021, respectively.

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

in the interim condensed consolidated statements of operations.

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.

At March 31, 2022, the Company had $ 4,432,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

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

Stock Options

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,

The following table summarizes the significant assumptions used to value the options granted for the three months ended March 31, 2022 and for the year ended December 31, 2021.

March 31, 2022

Risk–free interest rate

0.21 %  

Expected volatility

35.1 %  

Expected life, in years

Expected dividend yield

3.01 %  

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

The following table summarizes our outstanding stock options for the three months ended March 31, 2022 and for the year ended December 31, 2021.

Exercise Price

Options outstanding at January 1, 2021

809,529  

$ 71.24  

Options granted

104,057  

Options exercised

1 unchanged sentence

Options outstanding at December 31, 2021

866,956  

Options granted

56,795  

Options exercised

Options cancelled

Options outstanding at September 30, 2021

768,851  

$ 72.72  

$ 656,425  

Options exercisable at September 30, 2021

177,686  

$ 69.38  

$ 587,578  

September 30, 2021

Options outstanding at March 31, 2022

Options exercisable at March 31, 2022

March 31, 2022

Exercise Prices

3 unchanged sentences

Life in Years

103,775  

60.73 - 67.28  

665,076  

71.64 - 84.30  

768,851  

Note 15 –

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. 

The Company's income tax provision as a percentage of our income before income taxes was 25.3 % for the three months ended March 31, 2022 and 2021.

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 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.

For the three months ended March 31, 2022 and 2021, the accrual of state income tax 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 $ 103,824,000 and $ 99,537,000 at September 30, 2021 and December 31, 2020, respectively.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 101,413,000 and $ 98,048,000 at March 31, 2022 and December 31, 2021, 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.

It is possible that these claims plus unasserted claims could exceed our insurance coverages and our reserves, which could have a material adverse effect on our consolidated financial position, results of operations and cash flows.

As a result of the terms of our insurance policies and our use of wholly–owned limited purpose insurance companies, we have retained significant insurance risk with respect to workers’

As a result of the terms of our insurance policies and our use of wholly owned limited purpose insurance companies, we have retained significant insurance risk with respect to workers’

compensation and general and professional liability.

22 unchanged sentences

The United States declined intervention on March 1, 2021.

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

Thereafter, the Plaintiff filed an amended Complaint against Dr.

Sanja Malhotra, Integrated Behavioral Health, Inc.

and other entities Dr.

and other entities that Dr.

Malhotra is alleged to own or in which he has a financial interest. 

The Complaint also named multiple skilled nursing facilities as Defendants, including NHC Healthcare/Moulton, LLC, an affiliate of National HealthCare Corporation.

The gravamen of the Complaint against the facilities is that Dr.

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. 

The Complaint alleges that nurse practitioners affiliated with Dr.

Malhotra provided free services to the facilities in exchange for referrals to entities owned by or in which Dr.

Malhotra 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 was filed on November 4, 2021. 

On January 28, 2022, the district court stayed this matter and administratively terminated the motion to dismiss pending the U.S.

Supreme Court's review of a petition for certiorari filed in an unrelated matter, but involving one of the legal arguments raised in the motion to dismiss. 

We expect that the motion to dismiss will be renewed once the stay is lifted. 

There is no expected timeline for the lifting of the stay.  

Governmental Regulations

2 unchanged sentences

However, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusions from the Medicare, Medicaid and other federal healthcare programs.

There have been several enacted and proposed federal and state relief measures as a result of COVID- 19 which should provide support to us during this pandemic;

There have been several enacted and proposed federal and state relief measures as a result of COVID- 19 which have provided substantial support to us during this pandemic;

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.

Note 17  

 Subsequent Event

On May 3, 2022, we signed operations transfer agreements ("OTAs") for the seven skilled nursing facilities located in Massachusetts and New Hampshire. 

After a period of up to 90 days after the signing of the OTAs, the operations of the seven facilities are expected to be transferred to a third -party skilled nursing operator. 

We expect to transfer the operations during the third quarter of 2022.

The seven skilled nursing facilities had net patient revenues of $ 17,801,000 and $ 15,377,000 for the three months ended March 31, 2022 and 2021, respectively. 

The seven skilled nursing facilities had losses before income taxes of $ 635,000 and $ 2,769,000 for the three months ended March 31, 2022 and 2021, respectively. 

For the year ended December 31, 2021, the seven skilled nursing facilities had net patient revenues of $ 67,161,000 and losses before income taxes of $ 3,741,000 .

In conjunction with the OTAs, we have signed an acknowledgement agreement with NHI that will terminate our lease agreement with the seven skilled nursing facilities and amend our master lease agreement. 

The lease termination agreement and amendment to the master lease are subject to the operations being transferred.   

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