What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 188 added, 309 removed, 602 unchanged (45% of the section changed)

4 unchanged sentences

Three Months Ended

Nine Months Ended

Net patient revenues

Other revenues

Government stimulus income

Net operating revenues and grant income

Net operating revenues

Cost and expenses:

5 unchanged sentences

Income from operations

Other income:

Other income (expense):

Non–operating income

Unrealized gains/(losses) on marketable equity securities

Interest expense

Unrealized gains on marketable equity securities

Income before income taxes

Income tax provision

Net (income)/loss attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Net income attributable to National HealthCare Corporation

1 unchanged sentence

Weighted average common shares outstanding:

Dividends declared per common share

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

3 unchanged sentences

Three Months Ended

Nine Months Ended

Other comprehensive income/(loss):

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

Reclassification adjustment for realized losses on sales of 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

Net income attributable to noncontrolling interest

Comprehensive income attributable to National HealthCare Corporation

3 unchanged sentences

(in thousands)

September 30,

Current Assets:

5 unchanged sentences

152,785 140,064

Marketable debt securities

Restricted marketable equity securities

19 unchanged sentences

Deposits and other assets

10,084 14,786

Operating lease right-of-use assets

2 unchanged sentences

Intangible assets

19,864 19,864

Investments in unconsolidated companies

7 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Liabilities and Stockholders ’ Equity

2 unchanged sentences

$ 21,646 $ 25,493

Finance lease obligations, current portion

Operating lease liabilities, current portion

13 unchanged sentences

Long-term debt

126,500 129,500

Operating lease liabilities, less current portion

28 unchanged sentences

(unaudited – in thousands)

Nine Months Ended

Three Months Ended

Cash Flows From Operating Activities:

2 unchanged sentences

Equity in earnings of unconsolidated investments

Distributions from unconsolidated investments

Unrealized gains on marketable equity securities

Realized (gains)/losses on sale of marketable securities

Gains on sale of marketable securities

Gain on sale of unconsolidated company

9 unchanged sentences

Accrued risk reserves

Contract liabilities

Other current liabilities

3 unchanged sentences

Purchases of property and equipment

Acquisition of White Oak Senior Living, net of cash acquired

Acquisition of other businesses, net of cash acquired

Proceeds from the sale of unconsolidated company

Investments in notes receivable

Proceeds from sale of unconsolidated company

Investments in unconsolidated companies

Collections of notes receivable

Purchases of marketable securities

2 unchanged sentences

Cash Flows From Financing Activities:

Borrowings under credit facility

Repayments under credit facility

1 unchanged sentence

Dividends paid to common stockholders

Noncontrolling interest contributions

Issuance of common shares

Issuance of common stock

Repurchase of common shares

Entrance fee refunds

Net cash provided by/(used in) financing activities

Entrance fee deposits (refunds)

Net cash used in financing activities

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

9 unchanged sentences

(in thousands, except share and per share amounts)

For the nine months ended September 30, 2024 :

Capital in Excess

Retained Earnings

For the three months ended March 31, 2025 :

Comprehensive

3 unchanged sentences

– – – 32,205 – 85 32,290

Other comprehensive loss

– – – – ( 437 ) – ( 437 )

Stock–based compensation

– – 793 – – – 793

Shares sold – options exercised

150,194 1 8,412 – – – 8,413

Repurchase of common shares

( 101,131 ) – ( 9,900 ) – – – ( 9,900 )

Dividends declared to common stockholders ($ 0.59 per share)

– – – ( 9,086 ) – – ( 9,086 )

Balance at March 31, 2024

15,399,724 $ 154 $ 226,909 $ 704,726 $ ( 7,041 ) $ 1,766 926,514

– – – 26,844 – 262 27,106

Other comprehensive income

8 unchanged sentences

– – – ( 9,444 ) – – ( 9,444 )

Balance at June 30, 2024

15,422,937 154 229,410 722,162 ( 5,909 ) 2,028 947,845

Net income/(loss)

– – – 42,789 – ( 89 ) 42,700

Contributions attributable to noncontrolling interest

Other comprehensive income

– – – – 3,056 – 3,056

Stock–based compensation

– – 1,093 – – – 1,093

Shares sold – options exercised

34,417 2,232 – – – 2,232

Repurchase of common shares

( 16,384 ) – ( 2,100 ) – – – ( 2,100 )

Dividends declared to common stockholders ($ 0.61 per share)

– – – ( 9,419 ) – – ( 9,419 )

Balance at September 30, 2024

Balance at March 31, 2025

15,464,856 $ 154 $ 233,113 $ 774,954 $ ( 3,326 ) $ 3,087 $ 1,007,982

For the nine months ended September 30, 2023 :

For the three months ended March 31, 2024:

Comprehensive

2 unchanged sentences

15,350,661 $ 153 $ 227,604 $ 687,599 $ ( 6,604 ) $ 1,728 $ 910,480

Net income/(loss)

– – – 26,213 – 38 26,251

Other comprehensive income

Other comprehensive loss

– – – – ( 437 ) – ( 437 )

9 unchanged sentences

15,399,724 $ 154 $ 226,909 $ 704,726 $ ( 7,041 ) $ 1,766 $ 926,514

Net income/(loss)

– – – 16,281 – ( 364 ) 15,917

Other comprehensive loss

– – – – ( 1,200 ) – ( 1,200 )

Stock–based compensation

– – 772 – – – 772

Shares sold – options exercised

100 – 6 – – – 6

Dividends declared to common stockholders ($ 0.59 per share)

– – – ( 9,039 ) – – ( 9,039 )

Balance at June 30, 2023

15,320,543 153 225,926 666,896 ( 9,053 ) 2,436 886,358

Net income/(loss)

– – – 10,388 – ( 267 ) 10,121

Other comprehensive loss

– – – – ( 1,061 ) – ( 1,061 )

Stock–based compensation

– – 708 – – – 708

Shares sold – options exercised

4,017 – 254 – – – 254

Dividends declared to common stockholders ($ 0.59 per share)

– – – ( 9,040 ) – – ( 9,040 )

Balance at September 30, 2023

15,324,560 153 226,888 668,244 ( 10,114 ) 2,169 887,340

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

1 unchanged sentence

Notes to Interim Condensed Consolidated Financial Statements

September 30, 2024

March 31, 2025

Note 1 – Description of Business

National HealthCare Corporation (“NHC” or the “Company”) is a leading provider of senior health care services.

As of September 30, 2024, we operate or manage, through certain affiliates, 80 skilled nursing facilities with a total of 10,349 licensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 32 hospice agencies.

As of March 31, 2025, we operate or manage, through certain affiliates, 80 skilled nursing facilities with a total of 10,329 licensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 33 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.

31 unchanged sentences

Additionally, there may be ancillary services which are not included in the daily rates for routine services, but instead are treated as separate performance obligations satisfied at a point in time when those services are rendered.

Contract liabilities are recorded for payments the Company receives in which performance obligations have not been completed.

The Company determines the transaction price based on established billing rates reduced by explicit price concessions provided to third party payors.

2 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 $ 2,574,000 and $ 7,098,000 for the three and nine months ended September 30, 2024, respectively.

For the three and nine months ended September 30, 2023, bad debt expense was $ 1,668,000 and $ 5,331,000 , respectively.

As of September 30, 2024 and December 31, 2023, the Company has recorded allowance for doubtful accounts of $ 10,859,000 and $ 8,054,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

Bad debt expense was $ 2,661,000 and $ 2,471,000 for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, and December 31, 2024, the Company has recorded allowance for doubtful accounts of $ 10,926,000 and $ 9,702,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

Other Revenues

7 unchanged sentences

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

Government Grants

We account for government grants in accordance with International Accounting Standards ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance, and as such, we recognize grant income on a systematic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate.

For the nine months ended September 30, 2024, all conditions related to the Employee Retention Credit ("ERC") were met and the credit was recognized as government stimulus income.

The ERC was established by the CARES Act and intended to help businesses retain their workforce and avoid layoffs during the pandemic.

The ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees.

The qualified wages and health insurance benefits paid by the Company were related to the second, third and fourth quarters of 2020.

Segment Reporting

2 unchanged sentences

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

The Company also reports an “all other” category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office.

The Company also reports an "all other" category that includes revenues from rental income, management and accounting services fees, insurance services, and cost of the corporate office.

See Note 6 for further disclosure of the Company’s operating segments.

5 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 and incentive compensation, which were $ 6,288,000 and $ 19,678,000 for the three and nine months ended September 30, 2024, respectively.

General and administrative costs were $ 5,661,000 and $ 16,309,000 for the three and nine months ended September 30, 2023, respectively.

The increased general and administrative costs incurred during 2024 are due to acquisition-related expenses for the White Oak Senior Living portfolio.

See Note 3 - Acquisition of White Oak Senior Living for additional detail regarding the acquisition.

Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation, which were $ 6,632,000 and $ 6,164,000 for the three months ended March 31, 2025 and 2024, respectively.

Long-Term Leases

The Company’s lease portfolio primarily consists of operating real estate leases for certain skilled nursing facilities, assisted and independent living facilities, homecare and hospice offices, regional offices, and pharmacy warehouses.

The original terms of the leases typically range from two to fifteen years.

10 unchanged sentences

Property and Equipment

Property and equipment are recorded at cost or fair value, if acquired.

Property and equipment are recorded at cost.

Depreciation is provided by the straight-line method over the expected useful lives of the assets estimated as follows:

2 unchanged sentences

Business Combinations

We account for transactions that represent business combinations using the acquisition method of accounting in accordance with FASB ASC Topic 805, Business Combinations (Topic 805 ).

We account for transactions that represent business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations.

Acquisitions are accounted for as purchases and are included in our consolidated financial statements from their respective acquisition dates.

Assets acquired and liabilities assumed, if any, are measured at fair value on the acquisition date using the appropriate valuation method.

Such fair values that are not finalized for reporting periods following the acquisition date are estimated and recorded as provisional amounts during the measurement period.

The measurement period is defined as the date through which all information required to identify and measure the consideration transferred, the assets acquired, the liabilities assumed and any noncontrolling interests has been obtained, limited to one year from the acquisition date.

Goodwill generated from business combinations is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed.

Goodwill generated from acquisitions is recognized for the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed.

In determining the fair value of identifiable assets, we use various valuation techniques.

6 unchanged sentences

The Company’s indefinite-lived intangible assets consist of trade names and certificates of need and licenses.

The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the fair value of the intangible asset is below its carrying amount.

The Company reviews indefinite-lived intangible assets for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the carrying amount of the intangible asset is below its carrying amount.

Accrued Risk Reserves

10 unchanged sentences

We are principally self-insured for incidents occurring in all centers owned or leased by us.

The coverage includes both primary policies and excess policies.

The coverages include both primary policies and excess policies.

In all years, settlements, if any, in excess of available insurance policy limits and our own reserves would be expensed by us.

1 unchanged sentence

We have continuing care retirement centers (“CCRC”) within our operations.

Residents at these retirement centers may enter into continuing care contracts with us.

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

Residents may enter into continuing care contracts with us.

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

3 unchanged sentences

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, 2024, and December 31, 2023, we have recorded a future service obligation liability in the amount of $ 1,606,000 .

As of March 31, 2025, and December 31, 2024, we have recorded a future service obligation liability in the amount of $ 1,474,000 .

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

7 unchanged sentences

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

Variable Interest Entities

We have equity interests in unconsolidated limited liability companies that operate various post-acute and senior healthcare businesses.

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

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

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

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 unconsolidated companies” in the interim condensed consolidated balance sheets.

Recently Issued Accounting Guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023 - 07, “Segment Reporting (Topic 280 ):

Improvement to Reportable Segment Disclosures.” The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit and loss, and contain other disclosure requirements.

This ASU is effective for fiscal years beginning after December 15, 2023, which will be the Company's fiscal year 2024, and interim periods within fiscal years beginning after December 15, 2024.

We are currently evaluating the impact this standard will have on our disclosures.

Note 3 – Acquisition of White Oak Senior Living

On August 1, 2024, the Company purchased certain assets and assumed certain liabilities of the White Oak Senior Living (“White Oak”) portfolio for a purchase price of $ 221,400,000 .

The White Oak portfolio consists of 22 healthcare operations, which includes 15 skilled nursing facilities, two assisted living facilities, four independent living facilities, and a long-term care pharmacy.

The operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina ( 2,278 total beds/units).

The acquisition represents both an expansion of NHC’s operations into a new state (North Carolina) and a strategic advancement of its growth in its existing operational footprint.

The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocation.

The Company has performed a preliminary valuation analysis of the fair market value of White Oak’s assets acquired and liabilities assumed.

The final valuation of the assets acquired and liabilities assumed was not complete as of September 30, 2024, 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

Prepaid expenses and other assets

Property and equipment

Deferred tax asset

Operating lease right-of-use assets 11,380

Intangible assets

Total assets acquired

Operating lease liabilities, current portion 424

Accrued payroll

Other current liabilities

Operating lease liabilities, less current portion 10,956

Other noncurrent liabilities

Total liabilities assumed

Net identifiable assets acquired

Total estimated fair value of the acquisition

The indefinite-lived intangible assets acquired include the trade name of White Oak and the skilled nursing certificates of need and licenses.

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

We expect the goodwill to be deductible for income tax purposes.

For the three and nine months ended September 30, 2024, White Oak contributed net operating revenues of $ 37,305,000 and income before income taxes of $ 1,557,000 that are included in the Company’s interim condensed consolidated statements of operations.

The Company recognized $ 637,000 and $ 2,831,000 in acquisition-related expenses for the three and nine months ended September 30, 2024, respectively, in connection with the White Oak acquisition.

These costs related to legal and other professional fees, which were included as a component of other operating expenses in the 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, 2024 and 2023, assuming that the White Oak acquisition closed on January 1, 2023.

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 operating revenues and grant income

$ 358,334 $ 337,817 $ 1,065,418 $ 987,186

Income before income taxes

58,881 14,087 134,777 49,113

Net income attributable to NHC

$ 43,413 $ 10,431 $ 99,121 $ 34,064

Recently Adopted Accounting Guidance

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023 - 09 " Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures," which requires companies to disclosed disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.

ASU 2023 - 09 is effective for annual periods beginning with the Company's fiscal year 2025.

The Company has adopted the ASU and will include the required disclosures in our annual report.

Recent Accounting Guidance Not Yet Adopted

In October 2023, the FASB issued ASU 2023 - 06, " Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ," which amends U.S.

GAAP to include certain disclosure requirements that are currently required under SEC Regulation S- X or Regulation S-K.

Each amendment will be effective on the date on which the SEC removes the related disclosure requirement from SEC Regulation S- X or Regulation S-K.

The adoption is not expected to have a material impact on the Company's financial statements as these requirements were previously incorporated under the SEC Regulations.

In November 2024, the FASB issued ASU 2024 - 03 " Disaggregation of Income Statement Expenses ," which requires the Company to disaggregate key expense categories such as employee compensation and depreciation within its financial statements.

ASU 2024 - 03 is effective for annual periods beginning with the Company's fiscal year 2027, and interim periods with the Company's fiscal year 2028, with early adoption permitted.

We are currently evaluating the impact this ASU will have on the company's financial statements and related disclosures.

Note 3 – Net Patient Revenues

4 unchanged sentences

Three Months Ended

Nine Months Ended

Net patient revenues:

Inpatient services

Homecare and hospice

Total net patient revenue

$ 325,478 $ 252,254

Homecare and hospice services

36,129 33,569

Total net patient revenues

$ 361,607 $ 285,823

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

8 unchanged sentences

Three Months Ended

Nine Months Ended

Private Pay and Other

21 unchanged sentences

State Relief Supplemental Funding

The Company received supplemental Medicaid payments from various states, including healthcare relief funding under the American Rescue Plan Act ("ARPA") and other state specific relief programs.

The Company received supplemental Medicaid payments from various states.

The funding generally incorporates specific use requirements primarily for direct patient care including labor related expenses or various patient care related expenses.

We have recorded $ 5,267,000 and $ 4,232,000 in net patient revenues for these supplemental Medicaid payments for the three months ended September 30, 2024 and 2023, respectively.

We have recorded $ 11,314,000 and $ 15,362,000 in net patient revenues for these supplemental Medicaid payments for the nine months ended September 30, 2024 and 2023, respectively.

We have recorded $ 1,872,000 and $ 3,462,000 in net patient revenues for these supplemental Medicaid payments for the three months ended March 31, 2025 and 2024, respectively.

Third Party Payors

Laws and regulations governing Medicare and Medicaid programs are complex and subject to interpretation.

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation.

Noncompliance with such laws and regulations can be subject to regulatory actions including fines, penalties, and exclusion from the Medicare and Medicaid programs.

5 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 $ 18,815,000 and $ 18,369,000 as of September 30, 2024 and December 31, 2023, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

We have made provisions of approximately $ 13,897,000 and $ 15,351,000 as of March 31, 2025 and December 31, 2024, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

Note 4 – Other Revenues

5 unchanged sentences

Three Months Ended

Nine Months Ended

Rental income

$ 6,450 $ 5,959

Management and accounting services fees

1 unchanged sentence

Total other revenues

$ 12,090 $ 11,353

Rental Income

The Company leases real estate assets consisting of skilled nursing facilities and assisted living facilities to third party operators.

Additionally, we sublease four Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”) as noted in Note 8 – Long Term Leases.

Additionally, we sublease four Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”), who is a related party, as noted in Note 7 – Long Term Leases.

NHI is a publicly-traded real estate investment trust.

Adams, non-executive Chairman of the NHC Board, also serves on the Board of Directors of NHI.

Management Fees from National Health Corporation

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

We recognized management fees and interest on management fees from these facilities of $ 1,348,000 and $ 1,243,000 for the three months ended September 30, 2024 and 2023, respectively.

We recognized management fees and interest on management fees of $ 4,014,000 and $ 3,968,000 from these facilities for the nine months ended September 30, 2024 and 2023, respectively.

For the three months ended March 31, 2025 and 2024, we recognized management fees and interest on management fees of $ 1,408,000 and $ 1,320,000 , 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 ended September 30, 2024 and 2023 were $ 529,000 and $ 678,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 were $ 1,638,000 and $ 1,985,000 , 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, 2025 and 2024 were $ 525,000 and $ 582,000 , respectively.

Associated losses and expenses including those for self-insurance are included 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 ended September 30, 2024 and 2023 were $ 289,000 and $ 312,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the nine months ended September 30, 2024 and 2023 were $ 868,000 and $ 935,000 , 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, 2025 and 2024 were $ 289,000 and $ 290,000 , 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".

2 unchanged sentences

Three Months Ended

Nine Months Ended

Dividends and net realized gains and losses on sales of securities

$ 1,954 $ 2,056

Interest income

2 unchanged sentences

Total non-operating income

$ 4,079 $ 5,685

Gain on sale of unconsolidated company

In January 2024, the Company sold its 50 % joint venture ownership interest in a homecare agency located in Nashville, Tennessee.

In January 2024, the Company sold its ownership interest in a homecare agency located in Nashville, Tennessee.

The total consideration paid to the company was $ 2,100,000 , which resulted in a gain of $ 1,024,000 .

5 unchanged sentences

The Company also reports an "all other" category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office.

The Company’s CODM evaluates performance and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company while enhancing long-term shareholder value.

The Company’s CODM evaluates performance including pretax earnings and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company while enhancing long-term shareholder value.

The CODM does not review assets by segment in his resource allocation and therefore, assets by segment are not disclosed below.

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, 2024

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

Three Months Ended March 31, 2025

Net patient revenues

$ 325,478 $ 36,129 $ - $ 361,607

Other revenues

373 - 11,717 12,090

Net operating revenues

325,851 36,129 11,717 373,697

Costs and expenses:

Salaries, wages, and benefits

192,437 22,404 13,289 228,130

Other operating

81,870 7,258 3,329 92,457

8,834 608 1,923 11,365

Depreciation and amortization

10,062 130 786 10,978

Total costs and expenses

293,203 30,400 19,327 342,930

Income/(loss) from operations

32,648 5,729 ( 7,610 ) 30,767

Non-operating income

- - 4,079 4,079

Interest expense ( 2,106 ) - - ( 2,106 )

Unrealized gains on marketable equity securities

Income before income taxes

Three Months Ended September 30, 2023

Net patient revenues

Other revenues

Net operating revenues

Costs and expenses:

Salaries, wages, and benefits

Other operating

Depreciation and amortization

Total costs and expenses

Income/(loss) from operations

Non-operating income

Unrealized losses on marketable equity securities

- - 10,982 10,982

Income/(loss) before income taxes

Nine Months Ended September 30, 2024

Net patient revenues

Other revenues

Government stimulus income

Net operating revenues and grant income

Costs and expenses:

Salaries, wages, and benefits

Other operating

Depreciation and amortization

Total costs and expenses

Income/(loss) from operations

Non-operating income

Unrealized gains on marketable equity securities

Income before income taxes

Nine Months Ended September 30, 2023

$ 30,542 $ 5,729 $ 7,451 $ 43,722

Three Months Ended March 31, 2024

Net patient revenues

$ 252,254 $ 33,569 $ - $ 285,823

Other revenues

15 - 11,338 11,353

Net operating revenues

252,269 33,569 11,338 297,176

Costs and expenses:

Salaries, wages, and benefits

150,890 21,009 11,239 183,138

Other operating

68,683 5,972 2,774 77,429

8,112 566 1,670 10,348

Depreciation and amortization

9,630 187 769 10,586

Total costs and expenses

237,315 27,734 16,452 281,501

Income/(loss) from operations

14,954 5,835 ( 5,114 ) 15,675

Non-operating income

- - 5,685 5,685

Interest expense ( 46 ) - - ( 46 )

Unrealized gains on marketable equity securities

- - 14,399 14,399

Income before income taxes

$ 14,908 $ 5,835 $ 14,970 $ 35,713

Note 7 – Long-Term Leases

Operating Leases

At September 30, 2024, we lease from NHI the real property of 28 skilled nursing facilities, five assisted living centers and three independent living centers under one lease agreement.

At March 31, 2025, we lease from NHI the real property of 28 skilled nursing facilities, five assisted living centers and three independent living centers under one lease agreement.

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

The lease includes base rent plus a percentage rent.

The annual base rent is $ 32,625,000 in 2024, $ 32,225,000 in 2025, and $ 31,975,000 in 2026 with the lease term expiring in December 2026.

The annual base rent is $ 32,225,000 in 2025 and $ 31,975,000 in 2026 with the lease term expiring in 2026.

The percentage rent is based on a quarterly calculation of revenue increases and is payable on a quarterly basis.

Total facility rent expense to NHI was $ 10,085,000 and $ 9,300,000 for the three months ended September 30, 2024 and 2023, respectively.

Total facility rent expense to NHI was $ 29,371,000 and $ 27,719,000 for the nine months ended September 30, 2024 and 2023, respectively.

Total facility rent expense to NHI was $ 9,911,000 and $ 9,472,000 for the three months ended March 31, 2025 and 2024, respectively.

Minimum Lease Payments

The following table summarizes the maturity of our operating lease liabilities as of September 30, 2024 ( in thousands ):

The following table summarizes the maturity of our operating lease liabilities as of March 31, 2025 ( in thousands ):

Total minimum lease payments

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Three Months Ended

Nine Months Ended

Weighted average common shares outstanding

14 unchanged sentences

$ 2.07 $ 1.69

For the three and nine months ending September 30, 2024, we did not exclude any stock options from the calculation of diluted weighted average shares of common stock outstanding.

For the three and nine months ending September 30, 2023, 637,409 of stock options have been excluded from the calculation of diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive effect.

For the three months ended March 31, 2025 and 2024, 493,249 and 245,726 stock options, respectively, were excluded from the calculation of diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive impact.

Note 9 – Investments in Marketable Securities

5 unchanged sentences

Marketable securities consist of the following (in thousands) :

September 30, 2024

March 31, 2025

December 31, 2024

1 unchanged sentence

Marketable equity securities

Corporate debt securities

Treasury securities

$ 30,176 $ 152,785 $ 30,176 $ 140,064

Restricted investments available for sale:

Marketable equity securities

18,779 21,697 18,534 23,190

Corporate debt securities

58,006 57,223 58,927 57,471

Asset-based securities

15,306 14,263 15,593 14,410

Treasury securities

46,814 44,952 46,811 44,186

State and municipal securities

3,762 3,729 3,787 3,737

$ 172,843 $ 294,649 $ 173,828 283,058

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

September 30, 2024

March 31, 2025

December 31, 2024

NHI Common Stock

1,630,642 $ 24,734 $ 120,439 1,630,642 $ 24,734 $ 113,003

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, 2024

March 31, 2025

December 31, 2024

Within 1 year

$ 24,655 $ 24,424 $ 25,707 $ 25,317

66,455 64,280 66,117 63,379

6 to 10 years

32,208 31,019 32,648 30,606

Over 10 years

Gross unrealized gains related to marketable equity securities are $ 140,177,000 and $ 84,514,000 as of September 30, 2024 and December 31, 2023, respectively.

Gross unrealized losses related to marketable equity securities are $ 300,000 and $ 928,000 as of September 30, 2024 and December 31, 2023, respectively.

For the three months ended September 30, 2024 and 2023, the Company recognized net unrealized gains of $ 32,767,000 and net unrealized losses of $ 3,093,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

For the nine months ended September 30, 2024 and 2023, the Company recognized net unrealized gains of $ 56,290,000 and 2,943,000 , 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 $ 1,104,000 and $ 326,000 as of September 30, 2024 and December 31, 2023, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 4,253,000 and $ 7,937,000 as of September 30, 2024 and December 31, 2023, respectively.

570 444 646 502

$ 123,888 $ 120,167 $ 125,118 $ 119,804

Gross unrealized gains related to marketable equity securities are $ 126,575,000 and $ 115,259,000 as of March 31, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to marketable equity securities are $ 1,049,000 and $ 715,000 as of March 31, 2025 and December 31, 2024, respectively.

For the three months ended March 31, 2025 and 2024, the Company recognized net unrealized gains of $ 10,982,000 and $ 14,399,000 , 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 $ 494,000 and $ 135,000 as of March 31, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 4,215,000 and $ 5,449,000 as of March 31, 2025 and December 31, 2024, respectively.

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

The Company has not recognized any credit related impairments for the nine months ended September 30, 2024 and 2023.

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

Proceeds from the sale of available for sale marketable securities during the nine months ended September 30, 2024 and 2023 were $ 39,776,000 and $ 36,578,000 , respectively.

Investment gains of $ 331,000 and investment losses of $ 603,000 were realized on these sales during the nine months ended September 30, 2024 and 2023, respectively.

The Company has not recognized any credit related impairments for the three months ended March 31, 2025 and 2024.

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

Proceeds from the sale of available for sale marketable securities during the three months ended March 31, 2025 and 2024 were $ 12,288,000 and $ 11,615,000 , respectively.

Investment gains of $ 241,000 and $ 344,000 were realized on these sales during the three months ended March 31, 2025 and 2024, respectively.

Note 10 – Fair Value Measurements

8 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, 2024 and December 31, 2023 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, 2025 and December 31, 2024 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

September 30, 2024

March 31, 2025

For Identical

Cash and cash equivalents

$ 90,386 $ 90,386 $ – $ –

Restricted cash and cash equivalents

25,775 25,775 – –

Marketable equity securities

174,482 174,482 – –

Corporate debt securities

57,223 40,855 16,368 –

Asset–backed securities

14,263 – 14,263 –

Treasury securities

44,952 44,952 – –

State and municipal securities

3,729 804 2,925 –

Total financial assets

$ 410,810 $ 377,254 $ 33,556 $ –

Fair Value Measurements Using

2 unchanged sentences

Cash and cash equivalents

$ 76,121 $ 76,121 $ – $ –

Restricted cash and cash equivalents

20,801 20,801 – –

Marketable equity securities

163,254 163,254 – –

Corporate debt securities

57,471 43,656 13,815 –

Asset–backed securities

14,410 – 14,410 –

Treasury securities

44,186 44,186 – –

State and municipal securities

3,737 806 2,931 –

Total financial assets

$ 379,980 $ 348,824 $ 31,156 $ –

Note 11 – Goodwill and Other Intangible Assets

At September 30, 2024, the Company reviewed the carrying value of goodwill for impairment indicators.

At March 31, 2025, we evaluated potential triggering events that might be indicators that our goodwill and indefinite lived intangibles were impaired.

As a result of the review, there were no impairment indicators regarding the Company’s goodwill that required a quantitative test to be performed.

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

See Note 3 – Acquisition of White Oak Senior Living for further detail describing the goodwill and indefinite-lived intangible asset additions in 2024.

At September 30, 2024, the following table represents the activity related to our goodwill by segment ( in thousands ):

At March 31, 2025, the following table represents the activity related to our goodwill by segment ( in thousands ):

January 1, 2025

September 30, 2024

$ 5,924 $ 164,554 $ – $ 170,478

March 31, 2025

$ 5,924 $ 164,554 $ – $ 170,478

Indefinite-lived intangible assets consist of the following (in thousands) :

September 30, 2024

December 31, 2023

$ 15,896 $ 15,896

Certificates of need

Licenses 2,212 2,166

$ 19,864 $ 19,864

As part of the White Oak Senior Living acquisition, we recorded indefinite-lived intangible assets that consisted of the trade name ($11,496,000) and certificates of need and licenses ($1,271,000).

Note 12 - Stock Repurchase Program

During the nine months ended September 30, 2024, the Company repurchased 133,151 shares of its common stock for a total cost of $ 13,502,000 .

During the nine months ended September 30, 2023, the Company repurchased 44,349 shares of its common stock for a total cost of $ 2,482,000 .

During the three months ended March 31, 2025, the Company repurchased 17,409 shares of its common stock for a total cost of $ 1,722,000 .

During the three months ended March 31, 2024, the Company repurchased 101,131 shares of its common stock for a total cost of $ 9,900,000 .

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

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

Stock–based compensation totaled $ 1,093,000 and $ 708,000 for the three months ended September 30, 2024 and 2023, respectively.

Stock-based compensation totaled $ 3,062,000 and $ 2,119,000 for the nine months ended September 30, 2024 and 2023, respectively.

Stock–based compensation totaled $ 1,027,000 and $ 793,000 for the three months ended March 31, 2025 and 2024, respectively.

Stock–based compensation is included in “Salaries, wages and benefits” in the interim condensed consolidated statements of operations.

At September 30, 2024, the Company had $ 5,752,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

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

At March 31, 2025, the Company had $ 9,077,000 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, 2024 and for the year ended December 31, 2023.

September 30,

The following table summarizes the significant assumptions used to value the options granted for the three months ended March 31, 2025 and for the year ended December 31, 2024.

Risk–free interest rate

4.17 % 4.40 %

Expected volatility

26.9 % 24.1 %

Expected life, in years

Expected dividend yield

The following table summarizes our outstanding stock options for the nine months ended September 30, 2024 and for the year ended December 31, 2023.

2.81 % 2.63 %

The following table summarizes our outstanding stock options for the three months ended March 31, 2025 and for the year ended December 31, 2024.

Exercise Price

15 unchanged sentences

( 3,999 ) 75.69 –

Options outstanding at September 30, 2024

Options outstanding at March 31, 2025

876,161 $ 80.08 $ 11,675,000

Options exercisable at September 30, 2024

Options exercisable at March 31, 2025

342,716 $ 68.58 $ 8,396,000

September 30, 2024

March 31, 2025

Exercise Prices

6 unchanged sentences

876,161 $ 80.08 3.6

Note 14 – Income Taxes

The Company's income tax provision as a percentage of our income before income taxes was 26.1 % and 26.5 % for the three months ended March 31, 2025 and 2024, respectively.

Typically, these percentages vary from the U.S.

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

For the three months ended March 31, 2025 and 2024, the accrual of state income tax was the most 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.

The Company is no longer subject to U.S.

federal and state examinations by tax authorities for years before 2021 (with certain state exceptions).

Note 15 – Long-Term Debt

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

Interest rate at

September 30,

Interest rate

Maturity March 31,

Credit facility, interest payable monthly

Variable, 6.8%

2029 $ 134,000 $ 137,000

Less current portion

Total long-term debt

( 7,500 ) ( 7,500 )

Total long-term debt, less current portion

$ 126,500 $ 129,500

On August 1, 2024, the Company entered into a $ 200,000,000 senior credit facility with a five -year term consisting of a $ 150,000,000 term facility and a $ 50,000,000 revolving line of credit (the “Credit Facility”).

3 unchanged sentences

The revolving line of credit contains a commitment fee equal to 0.25 % of the unused borrowing capacity.

There are no amounts outstanding on the revolving line of credit at September 30, 2024.

There are no amounts outstanding on the revolving line of credit at March 31, 2025.

NHC’s obligations under the Credit Facility are unsecured.

1 unchanged sentence

The Credit Facility also contains customary events of default.

As of September 30, 2024, the Company is compliant with all financial covenants.

As of March 31, 2025, the Company is compliant with all financial covenants.

Based on level 2 inputs, the carrying value of the Company's long-term debt is considered to approximate the fair value of such debt based upon the interest rates that the Company believes it can currently obtain for similar debt.

The aggregate maturities of long–term debt for the five years subsequent to September 30, 2024 are as follows (in thousands) :

The aggregate maturities of long–term debt for the five years subsequent to March 31, 2025 are as follows (in thousands) :

Long–Term Debt

Note 16 – Income Taxes

The Company's income tax provision as a percentage of our income before income taxes was 26.4 % and 27.9 % for the three months ended September 30, 2024 and 2023, respectively.

The Company's income tax provision as a percentage of our income before income taxes was 26.3 % and 28.3 % for the nine months ended September 30, 2024 and 2023, respectively.

Typically, these percentages vary from the U.S.

For the three months and nine months ended September 30, 2024, the accrual of state income tax was the most significant reconciling item.

For the three and nine months ended September 30, 2023, the accrual of state income tax was the only significant reconciling items.

The Company is no longer subject to U.S.

federal and state examinations by tax authorities for years before 2020 (with certain state exceptions).

Note 16 – Contingencies and Commitments

Accrued Risk Reserves

We have wholly–owned limited purpose insurance companies that insure risks related to workers’ 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 $ 110,204,000 and $ 103,259,000 at September 30, 2024 and December 31, 2023, respectively.

We have wholly-owned limited purpose insurance companies that insure risks related to workers’ compensation 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 $ 108,197,000 and $ 103,616,000 at March 31, 2025 and December 31, 2024, 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.

15 unchanged sentences

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

Qui Tam Litigation

United States of America, ex rel.

Jennifer Cook and Sally Gaither v.

Integrated Behavioral Health, Inc., NHC HealthCare/Moulton, LLC, et al., Case No.

2:20 -CV- 00877 -AMM (N.D.

Ala.) This is a qui tam case originally filed under seal on June 22, 2020.

The United States declined intervention on March 1, 2021.

Thereafter, the Plaintiffs filed an amended Complaint against Dr.

Sanja Malhotra, Integrated Behavioral Health, Inc.

and other entities that Dr.

Malhotra was alleged to own or in which he allegedly had 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 Complaint alleged 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 denied the allegations and filed a motion to dismiss 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.

Thereafter, the U.S.

Supreme Court denied the petition for certiorari in the unrelated matter.

As a result, NHC Healthcare/Moulton, LLC renewed its motion to dismiss.

The District Court granted NHC Healthcare/Moulton’s Motion to Dismiss, along with other pending Motions to Dismiss, and entered an Order of Dismissal on March 23, 2023 and an Amended Order of Dismissal on April 4, 2023, which dismissed the case in its entirety with prejudice with respect to the claims asserted by the Plaintiffs.

The Plaintiffs filed a Notice of Appeal on April 20, 2023 to appeal the dismissal to the United States Court of Appeals for the Eleventh Circuit.

On December 21, 2023, the Eleventh Circuit entered an Order affirming the District Court’s dismissal of the claims.

The time period for the Plaintiffs to file a Petition for a Writ of Certiorari with the United States Supreme Court has expired making the Order affirming dismissal issued by the Eleventh Circuit final.

Civil Investigative Demand

8 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.

From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third -party claims.

These contracts primarily include (i) certain real estate leases, under which the Company may be required to indemnify property owners or prior facility operators for post-transfer liabilities and other claims arising from the Company’s use of the applicable premises, (ii) operations transfer agreements, in which the Company agrees to indemnify past operators of facilities against certain liabilities arising from the transfer of the operation and/or the operation thereof after the transfer to the Company or its subsidiary, (iii) certain lending agreements, under which the Company may be required to indemnify the lender against various claims and liabilities, (iv) certain agreements by and between the Company and/or its subsidiaries or affiliates, and (v) certain agreements with the Company officers, directors and others, under which the Company may be required to indemnify such persons for liabilities arising out of the nature of their relationship to the Company and/or its subsidiaries and affiliates.

The terms of such obligations vary by contract and, in most instances, do not expressly state or include a specific or maximum dollar amount.

Generally, amounts under these contracts cannot be reasonably estimated until a specific claim is asserted.

Consequently, because no specific indemnity claims have been asserted, no liabilities have been recorded for these obligations on the consolidated balance sheets for any of the periods presented.

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