What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-02-16 compared with 2023-02-17 · 65 added, 93 removed, 293 unchanged (35% of the section changed)

You should carefully consider the risk factors set forth below, as well as the other information contained in this Annual Report on Form 10–K.

These risk factors should be considered in connection with evaluating the forward–looking statements contained in this Annual Report on Form 10–K, because these factors could cause the actual results and conditions to differ materially from those projected in forward–looking statements.

You should carefully consider the risk factors set forth below, as well as the other information contained in this Annual Report on Form 10–K.

The risks described below are not the only risks facing us.

3 unchanged sentences

COVID-19 and other pandemics, epidemics, or outbreaks of a contagious illness may adversely affect our operating results, cash flows and financial condition.

The COVID-19 pandemic has had a negative impact and is expected to continue to have a negative impact on our business and results of operations.

Although vaccines for the COVID-19 virus are widely available in the United States, COVID-19 cases remain high in some areas.

According to the Centers for Disease Control and Prevention, older adults and people with certain underlying medical conditions are at higher risk for serious illness and death from COVID-19.

The COVID-19 pandemic had a negative impact on our business and results of operations.

COVID-19 and other pandemics, epidemics, or outbreaks of a contagious illness, and similar events, may cause harm to us, our partners (employees), our patients, our vendors and supply chain partners, and financial institutions, which could have a material adverse effect on our results of operations, financial condition and cash flows.

The COVID-19 impacts may include, but would not be limited to: 

The impacts may include, but would not be limited to:

Disruption to operations due to the unavailability of partners due to illness, quarantines, risk of illness, travel restrictions or factors that limit our existing or potential workforce.

Increased costs and staffing requirements related to additional CDC protocols, federal and state workforce protection and related isolation procedures, including obligations to test patients and staff for COVID-19.

Decreased availability and increased cost of supplies due to increased demand around essential personal protective equipment (“PPE”), sanitizers and cleaning supplies including disinfecting agents, and food and food-related products due to increased global demand and disruptions along the global supply chains of these manufactures and distributors.

Decreased census across all our operations, which could negatively impact our operating cash flows and financial condition.

4 unchanged sentences

The extent to which the COVID-19 pandemic will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted.

Such developments may include the ongoing geographic spread of the virus, the severity and the duration of the pandemic, the timing, availability and effectiveness of medical treatments and vaccines (including additional doses of vaccines), the impact of any mutations of the virus, and the type, duration and efficacy of actions that may be taken by various governmental authorities to contain the virus or treat its impact, among others.

Such developments may include the ongoing geographic spread of the virus, the timing, availability and effectiveness of medical treatments and vaccines (including additional doses of vaccines), the impact of any mutations of the virus, and the type, duration and efficacy of actions that may be taken by various governmental authorities to contain the virus or treat its impact, among others.

Any of these developments, individually or in aggregate, could materially impact our business and our financial results and condition.

We depend on reimbursement from Medicare, Medicaid and other third –

party payors, and reimbursement rates from such payors may be reduced.

We derive a substantial portion of our revenue from third–party payors, including the Medicare and Medicaid programs.

Third–party payor programs are highly regulated and are subject to frequent and substantial changes.

Changes in the reimbursement rate or methods of payment from third–party payors, including the Medicare and Medicaid programs, or the implementation of other measures to reduce reimbursements for our services has in the past, and could in the future, result in a substantial reduction in our revenues and operating margins.

We depend on reimbursement from Medicare, Medicaid and other third – party payors, and reimbursement rates from such payors may be reduced.

We derive a substantial portion of our revenue from third–party payors, including the Medicare and Medicaid programs.

Third–party payor programs are highly regulated and are subject to frequent and substantial changes.

For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit, imposing Medicare spending reductions of up to 2% per fiscal year, with a uniform percentage across all Medicare programs.

2 unchanged sentences

The full 2% reduction took effect July 1, 2022.

Net revenue realizable under third–party payor agreements can change after examination and retroactive adjustment by payors during the claims settlement processes or as a result of post–payment audits.

Payors may disallow requests for reimbursement based on determinations that certain costs are not reimbursable or reasonable because additional documentation is necessary or because certain services were not covered or were not reasonable and medically necessary.

6 unchanged sentences

It is possible that the effects of further refinements to payment systems that result in lower payments to us or cuts in state Medicaid funding could have a material adverse effect on our results of operations.

See Item 1, "Business –

Government Regulation" and "Business - Medicare Legislation and Regulations". 

See Item 1, "Business – Government Regulation" and "Business - Medicare Legislation and Regulations".

The industry trend toward value-based purchasing may negatively impact our revenues.

6 unchanged sentences

Under the SNF Value-Based Purchasing Program, CMS reduces SNF Medicare payments by 2 percentage points and redistributes the majority of these funds as incentive payments based on SNF quality measure performance.

In January 2022, CMS began implementing a nationwide expansion of the Home Health Value-Based Purchasing (“HHVBP) Model.

Under the model, home health agencies will receive increases or decreases to their Medicare fee-for-service payments of up to 5%, based on performance against specific quality measures relative to the performance of other providers.

11 unchanged sentences

If we fail to meet or exceed quality performance standards under any applicable value-based purchasing program, perform at a level below the outcomes demonstrated by our competitors, or otherwise fail to effectively provide or coordinate the efficient delivery of quality health care services, our reputation in the industry may be negatively impacted, we may receive reduced reimbursement amounts, and we may owe repayments to payors, causing our revenues to decline.

Failure to respond successfully to value-based purchasing trends could negatively impact our business, results of operations and/or financial condition.  

By undertaking to provide management services, advisory services, and/or financial services to other entities, we become at least partially responsible for meeting the regulatory requirements of those entities.

6 unchanged sentences

We may, therefore, make expenditures related to the provision of services for which we are not paid.

The cost to replace or retain qualified nurses, health care professionals and other key personnel may adversely affect our financial performance, and we may not be able to comply with certain states ’

staffing requirements.

We could experience significant increases in our operating costs due to shortages in qualified nurses, health care professionals and other key personnel.

11 unchanged sentences

The staffing level required to receive a 5-star rating in the CMS Nursing Home Five Star Quality Rating System is determined based on analysis of the relationship between staffing levels and measures of nursing home quality.

CMS places a strong emphasis on registered nurse (“RN”) staffing.

The overall and RN staffing ratings are set to one star for nursing homes that report four or more days in the quarter with no RN on-site.

Finally, staffing ratings are not suppressed for nursing homes that have five or more days with residents and no nurse staffing hours reported.

CMS posts information on nursing home staffing measures on the Care Compare website including staff turnover rates and weekend staffing levels.

CMS places a strong emphasis on registered nurse (“RN”) staffing.

CMS posts information on nursing home staffing measures on the Care Compare website including staff turnover rates and weekend staffing levels.

This new data has been incorporated into the Nursing Home Five Star Quality Rating System.

6 unchanged sentences

Disasters and similar events, which may increase as a result of climate change, may seriously harm our business.

Natural and man–made disasters and similar events, including terrorist attacks and acts of nature such as hurricanes, tornadoes, earthquakes and wildfires, may cause damage or disruption to us, our employees and our facilities, which could have an adverse impact on our patients and our business.

In order to provide care for our patients, we are dependent on consistent and reliable delivery of food, pharmaceuticals, utilities and other goods to our facilities, and the availability of employees to provide services at our facilities.

17 unchanged sentences

In addition, federal and state regulation may adversely impact our ability to complete acquisitions or pursue new developments.

For example, a Medicare regulation known as the “36 Month Rule”

prohibits the buyer of a Medicare-certified home health agency from assuming the Medicare billing privileges of an acquired agency if the acquired agency either enrolled in Medicare or underwent a change in majority ownership fewer than 36 months prior to the acquisition, subject to certain exceptions.

For example, a Medicare regulation known as the “36 Month Rule” prohibits the buyer of a Medicare-certified home health agency from assuming the Medicare billing privileges of an acquired agency if the acquired agency either enrolled in Medicare or underwent a change in majority ownership fewer than 36 months prior to the acquisition, subject to certain exceptions.

Instead, the buyer must enroll the acquired home health agency as a new provider with Medicare.

4 unchanged sentences

Upkeep of healthcare properties is capital intensive, requiring us to continually direct financial resources to the maintenance and enhancement of our physical plant and equipment.

As of December 31, 2022, we leased or owned 59 skilled nursing facilities, 20 assisted living facilities, and four independent living facilities.

As of December 31, 2023, we leased or owned 60 skilled nursing facilities, 24 assisted living facilities, 3 behavioral health hospitals, and four independent living facilities.

Our ability to maintain and enhance our physical plant and equipment in a suitable condition to meet regulatory standards, operate efficiently and remain competitive in our markets requires us to commit a substantial portion of our free cash flow to continued investment in our physical plant and equipment.

5 unchanged sentences

As is typical in the health care industry, we are subject to claims that our services have resulted in resident injury or other adverse effects.

We, like our industry peers, have experienced an increasing trend in the frequency and severity of professional liability and workers’

compensation claims and litigation asserted against us.

We, like our industry peers, have experienced an increasing trend in the frequency and severity of professional liability and workers’ compensation claims and litigation asserted against us.

In some states in which we have significant operations, insurance coverage for the risk of punitive damages arising from professional liability claims and/or litigation may not, in certain cases, be available due to state law prohibitions or limitations of availability.

We cannot assure you that we will not be liable for punitive damage awards that are either not covered or are in excess of our insurance policy limits.

We also believe that there have been, and will continue to be, governmental investigations of long–term care providers, particularly in the area of Medicare/Medicaid false claims, as well as an increase in enforcement actions resulting from these investigations.

Insurance is not available to cover such losses.

Any adverse determination in a legal proceeding or governmental investigation, whether currently asserted or arising in the future, could have a material adverse effect on our financial condition.

Due to the rising cost and limited availability of professional liability and workers’

compensation insurance, we are largely self–insured on all of these programs and as a result, there is no limit on the maximum number of claims or amount for which we or our insurance subsidiaries can be liable in any policy period.

Due to the rising cost and limited availability of professional liability and workers’ compensation insurance, we are largely self–insured on all of these programs and as a result, there is no limit on the maximum number of claims or amount for which we or our insurance subsidiaries can be liable in any policy period.

Although we base our loss estimates on independent actuarial analyses using the information we have to date, the amount of the losses could exceed our estimates.

1 unchanged sentence

In addition, our insurance coverage might not cover all claims made against us.

If we are unable to maintain our current insurance coverage, if judgments are obtained in excess of the coverage we maintain, if we are required to pay uninsured punitive damages, or if the number of claims settled within the self–insured retention currently in place significantly increases, we could be exposed to substantial additional liabilities.

We cannot assure you that the claims we pay under our self–insurance programs will not exceed the reserves we have set aside to pay claims.

The number of claims within the self–insured retention may increase.

We cannot assure you that the claims we pay under our self–insurance programs will not exceed the reserves we have set aside to pay claims.

The number of claims within the self–insured retention may increase.

If we fail to compete effectively with other health care providers, our revenues and profitability may decline.

20 unchanged sentences

Particularly, any significant increase in our Medicaid population could have a material adverse effect on our financial position, results of operations and cash flow, especially if states operating these programs continue to limit, or more aggressively seek limits on, reimbursement rates or service levels.

Private third –

party payors continue to try to reduce health care costs.

Private third–party payors are continuing their efforts to control health care costs through direct contracts with health care providers, increased utilization review and greater enrollment in managed care programs and preferred provider organizations, among other strategies.

Private third – party payors continue to try to reduce health care costs.

These private payors increasingly are demanding discounted fee structures and the assumption by health care providers of all or a portion of the financial risk.

The ability of private payors to control healthcare costs may be enhanced by the increasing consolidation of insurance companies and the vertical integration of health insurers with healthcare providers.

We could be adversely affected by the continuing efforts of private third–party payors to limit the amount of reimbursement we receive for health care services.

We cannot assure you that reimbursement under private third–party payor programs will remain at levels comparable to present levels or will be sufficient to cover the costs allocable to patients eligible for reimbursement pursuant to such programs.

Future changes in the reimbursement rates or methods of private or third–party payors or the implementation of other measures to reduce reimbursement for our services could result in a substantial reduction in our net operating revenues.

We could be adversely affected by the continuing efforts of private third–party payors to limit the amount of reimbursement we receive for health care services.

As a result of competitive pressures, our ability to maintain operating margins through price increases to private patients is limited.

6 unchanged sentences

We conduct business in a heavily regulated industry, and changes in, or violations of regulations may result in increased costs or sanctions that reduce our revenue and profitability.

In the ordinary course of our business, we are regularly subject to inquiries, investigations and audits by federal and state agencies to determine whether we are in compliance with regulations governing the operation of, and reimbursement for, skilled nursing facilities and nursing homes, assisted living and independent living facilities, hospice, home health agencies and our other operating areas.

These regulations include those relating to licensure, certification and enrollment with government programs, conduct of operations, ownership of facilities, construction of new and additions to existing facilities, allowable costs, adequacy and quality of services, qualifications and training of personnel, communications with patients and consumers, billing and coding for services, adequacy and manner of documentation for services provided, minimum direct care spending ratios, services and prices for services, and pharmaceuticals and controlled substances.

Various laws, including federal and state anti–kickback and anti–fraud statutes, prohibit certain business practices and relationships that might affect the provision and cost of health care services reimbursable under federal and/or state health care programs such as Medicare and Medicaid, including the payment or receipt of remuneration for the referral of patients whose care will be paid by federal governmental programs or fee-splitting arrangements between health care providers that are designed to induce the referral of patients to a provider for medical products and services.

Furthermore, many states prohibit business corporations from providing or holding themselves out as a provider of medical care.

4 unchanged sentences

When a private party brings a qui tam action under the False Claims Act, it files the complaint with the court under seal, and the defendant will generally not be aware of the lawsuit until the government makes a determination whether it will intervene and take a lead in the litigation.

Even if, during an investigation, the court partially unseals a complaint to allow the government and a defendant to work toward a resolution of the complaint's allegations, the defendant is prohibited from revealing to anyone the existence of the complaint or that the partial unsealing has occurred.

These laws and regulations are complex and limited judicial or regulatory interpretation exists.

We cannot assure you that governmental officials charged with responsibility for enforcing the provisions of these laws and regulations will not assert that one or more of our arrangements are in violation of the provisions of such laws and regulations.

The regulatory environment surrounding the post–acute and long–term care industry has intensified, particularly for larger for–profit, multi–facility providers like us.

The federal government has imposed extensive enforcement policies resulting in a significant increase in the number of inspections, citations of regulatory deficiencies and other regulatory sanctions, including terminations from the Medicare and Medicaid programs, denials of payment for new Medicare and Medicaid admissions and civil monetary penalties.

2 unchanged sentences

Furthermore, should we lose licenses or certifications for many of our facilities as a result of regulatory action or otherwise, we could be deemed in default under some of our agreements, including agreements governing outstanding indebtedness.

We have established policies and procedures that we believe are sufficient to ensure that we will operate in substantial compliance with these anti–fraud and abuse requirements.

From time to time, we may seek guidance as to the interpretation of these laws;

3 unchanged sentences

We are unable to predict the future course of federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations, or the intensity of federal and state enforcement actions.

Aggressive anti–fraud actions have had and could have an adverse effect on our financial position, results of operations and cash flows.

See Item 1, "Business –

Government Regulation".

We are unable to predict the ultimate impact of COVID-19 pandemic stimulus or relief legislation or the effect that such legislation or other government responses intended to assist healthcare providers in responding to the COVID-19 pandemic may have on our business, financial condition, results of operations, or cash flows.

In response to the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients and to provide financial relief to healthcare providers.

Together, the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCE Act”), the Consolidated Appropriations Act, 2021 (“CAA”) and the American Rescue Plan Act of 2021 authorized over $186 billion in funding to be distributed to health care providers through the Provider Relief Fund.

These funds were intended to reimburse eligible providers, including public entities and Medicare and/or Medicaid-enrolled providers and suppliers, for healthcare-related expenses or lost revenues attributable to COVID-19.

Recipients were not required to repay these funds, provided that they attest to and comply with certain terms and conditions, including not using Provider Relief Fund payments to reimburse expenses or losses that other sources are obligated to reimburse and submitting reports as required by HHS.

Recipients of Provider Relief Fund payments are subject to audit requirements, and we expect that recipients of funds from the Provider Relief Fund will be subject to significant scrutiny by the federal government.

We have structured our use of these funds in accordance with the terms and conditions, but federal regulators may disagree with our interpretation of these terms and conditions and require that we repay some or all amounts received at our facilities or impose other penalties.

Beyond financial assistance, federal and state governments have enacted legislation and established regulations intended to expand access to and payment for telehealth services, increase access to medical supplies and equipment, prioritize review of drug applications to help with shortages of emergency drugs, and ease various legal and regulatory burdens on health care providers.

HHS and CMS have announced other flexibilities for health care providers in response to COVID-19, such as relief from data submission requirements and measure suppression policies for providers participating in certain quality reporting programs.

It is unclear how changes to these and other value-based programs will affect our financial condition.

There is still a high degree of uncertainty surrounding the implementation of the CARES Act and related legislation passed in response to the COVID-19 pandemic, and the pandemic continues to evolve.

Some of the measures allowing for flexibility in delivery of care and various financial supports for health care providers are available only for the duration of the national public health emergency (“PHE”) declared by HHS as a result of the pandemic. 

The Biden administration announced on January 30, 2023 that the COVID-19 public health emergency is set to end on May 11, 2023. The federal government may consider additional stimulus and relief efforts, but we are unable to predict whether additional measures will be enacted or their impact.

There can be no assurance as to the total amount of financial and other types of assistance we will ultimately receive under stimulus and relief legislation, and it is difficult to predict the impact of such legislation on our operations.

Further, there can be no assurance that the terms and conditions of the Provider Relief Fund or other programs will not change in ways that affect funding we may receive, our ability to comply with such terms and conditions in the future or our eligibility to participate.

We continue to assess the potential impact of COVID-19 and government responses to the pandemic, including the enactment and implementation of the CARES Act and related legislation on our business, financial condition, results of operations and cash flows.

Aggressive anti–fraud actions have had and could have an adverse effect on our financial position, results of operations and cash flows.

See Item 1, "Business – Government Regulation".

We face uncertainty related to the COVID-19 public health emergency's ("PHE") expiration and wind-down, which could have a material adverse affect on our business, financial condition, results of operations and cash flows.

The extent to which the COVID-19 PHE's termination will affect our operations will depend on future developments, which are highly uncertain and cannot be predicted.

There remains uncertainty as to what changes will be made to the Health and Human Service’s emergency response requirements for our skilled nursing facilities and senior living facilities in order to better respond to the issues experienced during the COVID-19 PHE.

To the extent COVID-19 is endemic in nature, we may face continued challenges from ongoing infection control and emergency preparedness requirements made part of state laws or regulations.

Additionally, the long-term effects of the COVID-19 pandemic may include long-term decline in demand for care in skilled nursing facilities and senior living facilities.

Our business may be impacted by healthcare reform efforts.

6 unchanged sentences

There is also uncertainty regarding whether, when and what other health reform measures will be adopted, and the impact of such efforts on providers as well as other healthcare industry participants.

Some members of Congress have proposed expanding government-funded coverage, including proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or to establish a single payor system (such reforms are often referred to as “Medicare for All”), and some states have implemented or proposed public health insurance options.

In addition, CMS administrators may make changes to Medicaid payment models or grant additional flexibilities to states in the administration of state Medicaid programs, including by expanding the scope of waivers under which states may implement Medicaid expansion provisions, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards.

22 unchanged sentences

Our business is subject to a variety of federal, state and local environmental laws and regulations.

As a healthcare provider, we face regulatory requirements in areas of air and water quality control, medical and low–level radioactive waste management and disposal, asbestos management, response to mold and lead–based paint in our facilities and employee safety.

As an operator of healthcare facilities, we also may be required to investigate and remediate hazardous substances that are located on and/or under the property, including any such substances that may have migrated off, or may have been discharged or transported from the property.

21 unchanged sentences

Risks Related to Our Structure and Public Company Compliance

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes –

Oxley Act could result in a restatement of our financial statements, cause investors to lose confidence in our financial statements and our company and have a material adverse effect on our business and stock price.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes – Oxley Act could result in a restatement of our financial statements, cause investors to lose confidence in our financial statements and our company and have a material adverse effect on our business and stock price.

We produce our consolidated financial statements in accordance with the requirements of U.S.

Effective internal controls are necessary for us to provide reliable financial reports to help mitigate the risk of fraud and to operate successfully as a publicly traded company.

As a public company, we are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes–Oxley Act of 2002, or Section 404, which requires annual management assessments of the effectiveness of our internal controls over financial reporting.

Testing and maintaining internal controls can divert our management's attention from other matters that are important to our business.

2 unchanged sentences

Increasing costs of being publicly owned are likely to impact our future consolidated financial position and results of operations.

In connection with the Sarbanes–Oxley Act of 2002, we are subject to rules requiring our management to report on the effectiveness of our internal control over financial reporting.

If we fail to have effective internal controls and procedures for financial reporting in place, we could be unable to provide timely and reliable financial information which could, in turn, have an adverse effect on our business, results of operations, financial condition and cash flows.

Significant regulatory changes, including the Sarbanes–Oxley Act and rules and regulations promulgated as a result of the Sarbanes–Oxley Act, have increased, and in the future, are likely to further increase general and administrative costs.

In order to comply with the Sarbanes–Oxley Act of 2002, the listing standards of the NYSE exchange, and rules implemented by the SEC, we have had to hire additional personnel and utilize additional outside legal, accounting and advisory services, and may continue to require such additional resources.

Moreover, in the rapidly changing regulatory environment in which we operate, there is significant uncertainty as to what will be required to comply with many of the regulations.

1 unchanged sentence

Provision for losses in our financial statements may not be adequate.

Loss provisions in our financial statements for self–insured programs are made on an undiscounted basis in the relevant period.

These provisions are based on internal and external evaluations of the merits of individual claims, analysis of claims history and independent actuarially determined estimates.

Our management reviews the methods of determining these estimates and establishing the resulting accrued liabilities frequently, with any material adjustments resulting from being reflected in current earnings.

Although we believe that our provisions for self–insured losses in our financial statements are adequate, the ultimate liability may be in excess of the amounts recorded.

In the event the provisions for losses reflected in our financial statements are inadequate, our financial condition and results of operations may be materially affected.

17 unchanged sentences

A breach or attack, including those caused by updates and other releases, affecting any of these third parties could harm our business.

In addition, the COVID-19 pandemic may have an adverse impact on our information technology systems and our ability to securely preserve confidential information, including risks associated with telecommuting issues when our employees work remotely.

If personally identifiable information of our patients or others is improperly accessed, tampered with or distributed, we may incur significant costs to remediate possible injury to the affected patients, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personally identifiable information.

Security breaches, including physical or electronic break–ins, computer viruses, attacks by hackers and similar breaches can create system disruptions or shutdowns or the unauthorized disclosure of confidential information.

Additionally, healthcare businesses are increasingly targets of cyberattacks, whereby hackers disrupt business operations or obtain protected health information, often demanding large ransoms.

10 unchanged sentences

We may need to incur indebtedness, sell assets, or make certain discretionary capital expenditures.

The performances of our fixed –

income and our equity investment portfolios are subject to a variety of investment risks.

Our investment portfolios are comprised principally of fixed–income securities and common equities.

Our fixed–income portfolio is actively managed by an investment group and includes short–term investments and fixed–maturity securities.

The performances of our fixed–income and our equity portfolios are subject to a number of risks, including:

Interest rate risk – the risk of adverse changes in the value of fixed–income securities as a result of increases in market interest rates.

Investment credit risk – the risk that the value of certain investments may decrease in value due to the deterioration in financial condition of, or the liquidity available to, one or more issuers of those securities or, in the case of asset–backed securities, due to the deterioration of the loans or other assets that underlie the securities, which, in each case, also includes the risk of permanent loss.

Concentration risk – the risk that the portfolio may be too heavily concentrated in the securities of National Health Investors “NHI,” or certain sectors or industries, which could result in a significant decrease in the value of the portfolio in the event of a deterioration of the financial condition, performance, or outlook of NHI, or those certain sectors or industries.

Liquidity risk – the risk that we will not be able to convert investments into cash on favorable terms and on a timely basis or that we will not be able to sell them at all, when we desire to do so.

The performances of our fixed – income and our equity investment portfolios are subject to a variety of investment risks.

Our investment portfolios are comprised principally of fixed–income securities and common equities.

Our fixed–income portfolio is actively managed by an investment group and includes short–term investments and fixed–maturity securities.

The performances of our fixed–income and our equity portfolios are subject to a number of risks, including:

Interest rate risk – the risk of adverse changes in the value of fixed–income securities as a result of increases in market interest rates.

Investment credit risk – the risk that the value of certain investments may decrease in value due to the deterioration in financial condition of, or the liquidity available to, one or more issuers of those securities or, in the case of asset–backed securities, due to the deterioration of the loans or other assets that underlie the securities, which, in each case, also includes the risk of permanent loss.

Concentration risk – the risk that the portfolio may be too heavily concentrated in the securities of National Health Investors “NHI,” or certain sectors or industries, which could result in a significant decrease in the value of the portfolio in the event of a deterioration of the financial condition, performance, or outlook of NHI, or those certain sectors or industries.

Liquidity risk – the risk that we will not be able to convert investments into cash on favorable terms and on a timely basis or that we will not be able to sell them at all, when we desire to do so.

Disruptions in the financial markets or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us.

In addition, the success of our investment strategies and asset allocations in the fixed–income portfolio may vary depending on the market environment.

The fixed–income portfolio's performance also may be adversely impacted if, among other factors:

In addition, the success of our investment strategies and asset allocations in the fixed–income portfolio may vary depending on the market environment.

The fixed–income portfolio's performance also may be adversely impacted if, among other factors:

there is a lack of transparency regarding the underlying businesses of the issuers of the securities that we purchase;

3 unchanged sentences

Equity markets, sectors, industries, and individual securities may be subject to high volatility and to long periods of depressed or declining valuations.

If the fixed–income or equity portfolios, or both, were to suffer a decrease in value due to market, sector, or issuer–specific conditions to a substantial degree, our liquidity, financial position, and financial results could be materially adversely affected.

Our stock price is volatile and fluctuations in our operating results, quarterly earnings and other factors may result in declines in the price of our common stock.

17 unchanged sentences

additions or departures of key personnel.

We may not be able to pay or maintain dividends and the failure to do so would adversely affect our stock price . 

We currently pay a quarterly dividend on our common stock and our Board intends to continue to pay a quarterly dividend.

2 unchanged sentences

The failure to pay or maintain dividends could adversely affect our stock price.

UNRESOLVED STAFF COMMENTS

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-K

Item 1A. Risk Factors