What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 152 added, 107 removed, 884 unchanged (23% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net patient revenues

3 unchanged sentences

Government stimulus income

- 9,445 - 9,445

Net operating revenues and grant income

18 unchanged sentences

( 1,456 ) ( 1,742 ) ( 5,555 ) ( 1,788 )

Unrealized gains/(losses) on marketable equity securities

Unrealized gains on marketable equity securities

20,827 32,767 26,748 56,290

4 unchanged sentences

41,009 42,700 97,412 96,057

Net income attributable to noncontrolling interest

Net (income)/loss attributable to noncontrolling interest

( 1,770 ) 89 ( 2,246 ) ( 211 )

14 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

$ 41,009 $ 42,700 $ 97,412 $ 96,057

Other comprehensive income:

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

Unrealized gains on investments in marketable debt securities

868 3,516 3,543 3,074

5 unchanged sentences

755 3,056 3,587 3,751

Net income attributable to noncontrolling interest

Net (income)/loss attributable to noncontrolling interest

( 1,770 ) 89 ( 2,246 ) ( 211 )

5 unchanged sentences

(in thousands)

September 30,

Current Assets:

40 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Liabilities and Stockholders ’ Equity

48 unchanged sentences

(unaudited – in thousands)

Six Months Ended

Nine Months Ended

Cash Flows From Operating Activities:

13 unchanged sentences

Deferred income taxes

( 1,406 ) 6,041

Stock–based compensation

7 unchanged sentences

Accrued payroll

18,925 ( 1,873 )

Amounts due to third party payors

( 191 ) ( 151 )

Accrued risk reserves

Other current liabilities

30,250 12,434

Other noncurrent liabilities

5 unchanged sentences

( 26,049 ) ( 19,444 )

Acquisition of White Oak Senior Living, net of cash acquired

- ( 215,896 )

Acquisition of other businesses, net of cash acquired

Proceeds from the sale of unconsolidated company

9 unchanged sentences

Cash Flows From Financing Activities:

Borrowings under credit facility

Repayments under credit facility

( 63,875 ) ( 3,000 )

Principal payments under finance lease obligations

1 unchanged sentence

( 28,773 ) ( 27,545 )

Noncontrolling interest contributions

Issuance of common shares

2 unchanged sentences

Entrance fee deposits (refunds)

Net cash used in financing activities

Net cash (used in)/provided by financing activities

( 92,735 ) 119,640

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

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

54,612 ( 10,894 )

14 unchanged sentences

(in thousands, except share and per share amounts)

For the six months ended June 30, 2025 :

For the nine months ended September 30, 2025 :

Comprehensive

28 unchanged sentences

15,499,173 $ 154 $ 234,868 $ 788,767 $ ( 1,884 ) $ 3,478 $ 1,025,383

For the six months ended June 30, 2024 :

– – – 39,239 – 1,770 41,009

Other comprehensive income

– – – – 755 – 755

Stock–based compensation

– – 1,239 – – – 1,239

Shares sold – options exercised

43,894 – 2,953 – – – 2,953

Repurchase of common shares

( 27,957 ) – ( 3,182 ) – – – ( 3,182 )

Dividends declared to common stockholders ($ 0.64 per share)

– – – ( 9,930 ) – – ( 9,930 )

Balance at September 30, 2025

15,515,110 $ 154 $ 235,878 $ 818,076 $ ( 1,129 ) $ 5,248 $ 1,058,227

For the nine months ended September 30, 2024 :

Comprehensive

28 unchanged sentences

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

15,440,970 $ 154 $ 230,635 $ 755,532 $ ( 2,853 ) $ 3,328 986,796

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

1 unchanged sentence

Notes to Interim Condensed Consolidated Financial Statements

June 30, 2025

September 30, 2025

Note 1 – Description of Business

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

As of June 30, 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.

As of September 30, 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.

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

Explicit price concessions are based on contractual agreements and historical experience.

The Company considers the patient's ability and intent to pay the amount of consideration upon admission.

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 $ 3,377,000 and $ 6,038,000 for the three and six months ended June 30, 2025, respectively.

For the three and six months ended June 30, 2024, bad debt expense was $ 2,053,000 and $ 4,524,000 , respectively.

As of June 30, 2025 and December 31, 2024, the Company has recorded allowance for doubtful accounts of $ 12,452,000 and $ 9,702,000 , respectively, as our best estimate of expected losses inherent in the accounts receivable balance.

We determine the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration, such as implicit price concessions.

We utilize the expected value method to determine the amount of variable consideration that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type.

We constrain the transaction price, such that net revenues are recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future.

If actual amounts of consideration ultimately received differ from our estimates, we adjust these estimates, which would affect net revenue in the period such variances become known.

Other Revenues

9 unchanged sentences

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

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.

14 unchanged sentences

The related cost basis of the contributed land was $ 2,019,000 , which resulted in a gain of $ 3,606,000 .

The gain has been included in the interim condensed consolidated statements of operations as "other operating expenses."

The gain has been included in the interim condensed consolidated statements of operations as a reduction of "other operating expenses."

General and Administrative Costs

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 $ 7,027,000 and $ 13,659,000 for the three and six months ended June 30, 2025, respectively.

General and administrative costs were $ 7,226,000 and $ 13,390,000 for the three and six months ended June 30, 2024, respectively.

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 $ 6,250,000 and $ 19,909,000 for the three and nine months ended September 30, 2025, respectively.

General and administrative costs were $ 6,288,000 and $ 19,678,000 for the three and nine months ended September 30, 2024, respectively.

Long-Term Leases

19 unchanged sentences

Original investments in these entities are recorded at cost and subsequently adjusted by our share of equity in income or losses.

As of June 30, 2025, the majority of our investments in unconsolidated companies relates to a multi-family development that is under construction in Franklin, Tennessee, in which we own a 55 % non-controlling interest.

As of September 30, 2025, the majority of our investments in unconsolidated companies relates to a multi-family development that is under construction in Franklin, Tennessee, in which we own a 55 % non-controlling interest.

Business Combinations

34 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 June 30, 2025 and December 31, 2024, we have recorded a future service obligation liability in the amount of $ 1,474,000 .

As of September 30, 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.

21 unchanged sentences

Reclassifications

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

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

Note 3 – Net Patient Revenues

4 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net patient revenues:

15 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

31 % 30 % 31 % 32 %

28 unchanged sentences

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 $ 1,812,000 and $ 2,585,000 in net patient revenues for these supplemental Medicaid payments for the three months ended June 30, 2025 and 2024, respectively.

We have recorded $ 3,684,000 and $ 6,047,000 in net patient revenues for these supplemental Medicaid payments for the six months ended June 30, 2025 and 2024, respectively.

We have recorded $ 1,838,000 and $ 5,267,000 in net patient revenues for these supplemental Medicaid payments for the three months ended September 30, 2025 and 2024, respectively.

We have recorded $ 5,522,000 and $ 11,314,000 in net patient revenues for these supplemental Medicaid payments for the nine months ended September 30, 2025 and 2024, respectively.

Third Party Payors

7 unchanged sentences

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

We have made provisions of approximately $ 15,160,000 and $ 15,351,000 as of June 30, 2025 and December 31, 2024, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

We have made provisions of approximately $ 15,060,000 and $ 15,351,000 as of September 30, 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

Six Months Ended

Nine Months Ended

Rental income

14 unchanged sentences

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 $ 1,376,000 and $ 1,346,000 for the three months ended June 30, 2025 and 2024, respectively.

We recognized management fees and interest on management fees of $ 2,784,000 and $ 2,666,000 from these facilities for the six months ended June 30, 2025 and 2024, respectively.

We recognized management fees and interest on management fees from these facilities of $ 1,377,000 and $ 1,348,000 for the three months ended September 30, 2025 and 2024, respectively.

We recognized management fees and interest on management fees of $ 4,161,000 and $ 4,014,000 from these facilities for the nine months ended September 30, 2025 and 2024, respectively.

Insurance Services

For workers’ compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended June 30, 2025 and 2024 were $ 541,000 and $ 527,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the six months ended June 30, 2025 and 2024 were $ 1,066,000 and $ 1,109,000 , respectively.

For workers’ compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024 were $ 677,000 and $ 529,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the nine months ended September 30, 2025 and 2024 were $ 1,743,000 and $ 1,638,000 , 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 June 30, 2025 and 2024 were $ 289,000 and $ 289,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the six months ended June 30, 2025 and 2024 were $ 579,000 and $ 579,000 , respectively.

For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended September 30, 2025 and 2024 were $ 289,000 .

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

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

Six Months Ended

Nine Months Ended

Dividends and net realized gains and losses on sales of securities

2 unchanged sentences

2,676 2,603 7,388 7,790

Equity in earnings of unconsolidated investments

Equity in earnings/(loss) of unconsolidated investments

(105 ) ( 62 ) 512 589

14 unchanged sentences

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

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Net patient revenues

20 unchanged sentences

( 1,456 ) - - ( 1,456 )

Unrealized losses on marketable equity securities

Unrealized gains on marketable equity securities

- - 20,827 20,827

Income/(loss) before income taxes

Income before income taxes

$ 28,754 $ 8,446 $ 17,209 $ 54,409

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Net patient revenues

2 unchanged sentences

370 - 11,154 11,524

Government stimulus income

- - 9,445 9,445

Net operating revenues and grant income

10 unchanged sentences

265,679 28,842 22,888 317,409

Income from operations

Income/(loss) from operations

27,717 6,806 ( 11,734 ) 22,789

2 unchanged sentences

Interest expense

( 1,742 ) - - ( 1,742 )

Unrealized gains on marketable equity securities

2 unchanged sentences

$ 25,975 $ 6,806 $ 25,257 $ 58,038

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Net patient revenues

2 unchanged sentences

1,197 - 34,126 35,323

Net operating revenues and grant income

Net operating revenues

983,035 114,107 34,126 1,131,268

19 unchanged sentences

$ 89,726 $ 21,571 $ 19,002 $ 130,299

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Net patient revenues

28 unchanged sentences

Operating Leases

At June 30, 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.

At September 30, 2025, we lease from NHI the real property of 32 skilled nursing facilities 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 $ 32,225,000 in 2025 and $ 31,975,000 in 2026 with the lease term expiring in December 2026.

We have two remaining contractual options to renew the lease for 5 -year periods commencing January 1, 2027 and January 1, 2032, with a base rent for each renewal term equal to the fair rental value of the leased property as negotiated between the parties, without including any value attributable to improvements to the leased property voluntarily made by us at our expense.

See Note 16 - Contingencies and Commitments and Note 17 - Subsequent Events for further discussion of the lease and our notice of exercise of the next renewal option.

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 $ 9,903,000 and $ 9,814,000 for the three months ended June 30, 2025 and 2024, respectively.

Total facility rent expense to NHI was $ 19,814,000 and $ 19,286,000 for the six months ended June 30, 2025 and 2024, respectively.

Total facility rent expense to NHI was $ 9,911,000 and $ 10,085,000 for the three months ended September 30, 2025 and 2024, respectively.

Total facility rent expense to NHI was $ 29,725,000 and $ 29,371,000 for the nine months ended September 30, 2025 and 2024, respectively.

Minimum Lease Payments

The following table summarizes the maturity of our operating lease liabilities as of June 30, 2025 ( in thousands ):

The following table summarizes the maturity of our operating lease liabilities as of September 30, 2025 ( in thousands ):

Total minimum lease payments

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Weighted average common shares outstanding

14 unchanged sentences

$ 2.50 $ 2.73 $ 6.10 $ 6.15

For the three and six months ended June 30, 2025, 269,351 stock options 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.

For the three and six months ended June 30 2024, 233,486 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 and nine months ended September 30, 2025, 6,450 stock options 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.

For the three and nine months ended September 30 2024, we did not exclude any stock options from the calculation of diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive effect.

Note 9 – Investments in Marketable Securities

5 unchanged sentences

Marketable securities consist of the following (in thousands) :

June 30, 2025

September 30, 2025

December 31, 2024

15 unchanged sentences

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

June 30, 2025

September 30, 2025

December 31, 2024

2 unchanged sentences

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

June 30, 2025

September 30, 2025

December 31, 2024

7 unchanged sentences

$ 124,021 $ 122,912 $ 125,118 $ 119,804

Gross unrealized gains related to marketable equity securities are $ 120,859,000 and $ 115,259,000 as of June 30, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to marketable equity securities are $ 393,000 and $ 715,000 as of June 30, 2025 and December 31, 2024, respectively.

For the three months ended June 30, 2025 and 2024, the Company recognized net unrealized losses of $ 5,061,000 and net unrealized gains of $ 9,124,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

For the six months ended June 30, 2025 and 2024, the Company recognized net unrealized gains of $ 5,921,000 and $ 23,523,000 , 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 $ 1,044,000 and $ 135,000 as of June 30, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 3,032,000 and $ 5,449,000 as of June 30, 2025 and December 31, 2024, respectively.

Gross unrealized gains related to marketable equity securities are $ 141,687,000 and $ 115,259,000 as of September 30, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to marketable equity securities are $ 394,000 and $ 715,000 as of September 30, 2025 and December 31, 2024, respectively.

For the three months ended September 30, 2025 and 2024, the Company recognized net unrealized gains of $ 20,827,000 and $ 32,767,000 , 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, 2025 and 2024, the Company recognized net unrealized gains of $ 26,748,000 and $ 56,290,000 , 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 $ 1,445,000 and $ 135,000 as of September 30, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 2,554,000 and $ 5,449,000 as of September 30, 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 six months ended June 30, 2025 and 2024.

The Company has not recognized any credit related impairments for the nine months ended September 30, 2025 and 2024.

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 six months ended June 30, 2025 and 2024 were $ 43,455,000 and $ 34,662,000 , respectively.

Investment gains of $ 480,000 and $ 350,000 were realized on these sales during the six months ended June 30, 2025 and 2024, respectively.

Proceeds from the sale of available for sale marketable securities during the nine months ended September 30, 2025 and 2024 were $ 64,689,000 and $ 39,776,000 , respectively.

Investment gains of $ 872,000 and $ 331,000 were realized on these sales during the nine months ended September 30, 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 June 30, 2025 and December 31, 2024 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

The following table summarizes fair value measurements by level at September 30, 2025 and December 31, 2024 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

June 30, 2025

September 30, 2025

For Identical

35 unchanged sentences

Note 11 – Goodwill and Other Intangible Assets

At June 30, 2025, we evaluated potential triggering events that might be indicators that our goodwill and indefinite lived intangibles were impaired.

At September 30, 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.

2 unchanged sentences

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

At June 30, 2025, the following table represents the activity related to our goodwill by segment ( in thousands ):

At September 30, 2025, the following table represents the activity related to our goodwill by segment ( in thousands ):

January 1, 2025

$ 5,924 $ 164,554 $ – $ 170,478

June 30, 2025

September 30, 2025

$ 5,924 $ 164,554 $ – $ 170,478

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

September 30,

December 31, 2024

3 unchanged sentences

Note 12 - Stock Repurchase Program

During the six months ended June 30, 2025, the Company repurchased 60,781 shares of its common stock for a total cost of $ 6,384,000 .

During the six months ended June 30, 2024, the Company repurchased 116,767 shares of its common stock for a total cost of $ 11,402,000 .

During the nine months ended September 30, 2025, the Company repurchased 88,738 shares of its common stock for a total cost of $ 9,566,000 .

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 .

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

1 unchanged sentence

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 $ 1,233,000 and $ 1,175,000 for the three months ended June 30, 2025 and 2024, respectively.

Stock-based compensation totaled $ 2,260,000 and $ 1,969,000 for the six months ended June 30, 2025 and 2024, respectively.

Stock–based compensation totaled $ 1,239,000 and $ 1,093,000 for the three months ended September 30, 2025 and 2024, respectively.

Stock-based compensation totaled $ 3,499,000 and $ 3,062,000 for the nine months ended September 30, 2025 and 2024, respectively.

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

At June 30, 2025, the Company had $ 8,425,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

At September 30, 2025, the Company had $ 7,185,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

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

Stock Options

The following table summarizes the significant assumptions used to value the options granted for the six months ended June 30, 2025 and for the year ended December 31, 2024.

The following table summarizes the significant assumptions used to value the options granted for the nine months ended September 30, 2025 and for the year ended December 31, 2024.

September 30,

Risk–free interest rate

5 unchanged sentences

2.80 % 2.63 %

The following table summarizes our outstanding stock options for the six months ended June 30, 2025 and for the year ended December 31, 2024.

The following table summarizes our outstanding stock options for the nine months ended September 30, 2025 and for the year ended December 31, 2024.

Exercise Price

15 unchanged sentences

( 6,333 ) 78.77 –

Options outstanding at June 30, 2025

Options outstanding at September 30, 2025

789,345 $ 82.78 $ 30,575,000

Options exercisable at June 30, 2025

Options exercisable at September 30, 2025

265,750 $ 73.96 $ 12,636,000

June 30, 2025

September 30, 2025

Exercise Prices

7 unchanged sentences

Note 14 – Income Taxes

The Company's income tax provision as a percentage of our income before income taxes was 25.0 % and 25.9 % for the three months ended June 30, 2025 and 2024, respectively.

The Company's income tax provision as a percentage of our income before income taxes was 25.7 % and 26.2 % for the six months ended June 30, 2025 and 2024, respectively.

The Company's income tax provision as a percentage of our income before income taxes was 24.6 % and 26.4 % for the three months ended September 30, 2025 and 2024, respectively.

The Company's income tax provision as a percentage of our income before income taxes was 25.2 % and 26.3 % for the nine months ended September 30, 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 and six months ended June 30, 2025, the accrual of state income tax was the most significant reconciling item.

For the three and six months ended June 30, 2024, the accrual of state income tax was the only significant reconciling items.

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.

1 unchanged sentence

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

On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (“OBBBA”).

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

ASC 740, Income Taxes , requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted.

Consequently, as of the date of enactment, and during the year ended December 31, 2025, the Company continues to evaluate all deferred tax balances under the newly enacted tax law and identify any changes required to its financial statements as a result of the OBBBA.

The Company is still evaluating the impact of the OBBBA, and the results of such evaluations will be reflected on the Company’s Form 10 -K for the year ended December 31, 2025.

Note 15 – Long-Term Debt

1 unchanged sentence

Interest rate at

September 30,

Credit facility, interest payable monthly

9 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 June 30, 2025.

There are no amounts outstanding on the revolving line of credit at September 30, 2025.

NHC’s obligations under the Credit Facility are unsecured.

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The Credit Facility also contains customary events of default.

As of June 30, 2025, the Company is compliant with all financial covenants.

As of September 30, 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 June 30, 2025 are as follows (in thousands) :

The aggregate maturities of long–term debt for the five years subsequent to September 30, 2025 are as follows (in thousands) :

Long–Term Debt

Note 16 – Contingencies and Commitments

Note 16 – Contingencies, Commitments and Other Matters

National Health Investors, Inc.

As discussed in Note 7 - Long-Term Leases, our wholly-owned subsidiary, NHC/OP, L.P.

("the tenant"), is the tenant under a Master Agreement to Lease with NHI dated October 17, 1991, as amended (the "Master Lease"), for 32 skilled nursing facilities and three independent living centers (collectively, the "Leased Property").

On July 29, 2025, the Tenant received a letter from NHI notifying the Tenant of allegations it was not in compliance with four non-monetary provisions of the Master Lease and requesting compliance by August 29, 2025.

The Tenant's legal counsel sent NHI's legal counsel a letter dated August 15, 2025 stating the Tenant's belief that the Tenant was in compliance with the Master Lease and requesting clarifying information so that it could expeditiously and adequately address any alleged potential non-compliance with the Master Lease.

NHI’s counsel’s first substantive response to the August 15, 2025 letter was a letter dated September 8, 2025 formally alleging the Tenant is in default under the Master Lease as a result of the Tenant’s non-compliance with the same four non-monetary provisions of the Master Lease, stating that the cure period under the Master Lease (discussed below) was commencing, and stating that failure to cure the alleged defaults within thirty ( 30 ) days would result in an “Event of Default” under the Master Lease, entitling the Landlord to pursue any and all remedies under the Master Lease.

The September 8, 2025 letter also included limited clarification on the allegations made in the July 29, 2025 letter.

Under the Master Lease, an “Event of Default” occurs with respect to the areas of alleged non-monetary non-compliance, if such non-compliance continues for a period of thirty ( 30 ) days after written notice is given to the Tenant by NHI;

or, if by reason of the nature of such non-compliance, it cannot be remedied within thirty ( 30 ) days, the Tenant fails to proceed with reasonable diligence (satisfactory to NHI) after receipt of the notice to cure the alleged non-compliance.

The Tenant continues to dispute that the alleged areas of non-monetary non-compliance represent a default under the Master Lease and believes that any areas that do represent non-compliance are subject only to the obligation to proceed with reasonable diligence to cure the alleged non-compliance, and that the Tenant has so proceeded.

The Tenant continues to review the allegations and has been and intends to continue to remain in communication with NHI and NHI’s counsel concerning NHI’s allegations.

Prior to the Landlord’s initial July 29, 2025 letter, the Tenant began negotiations with the Landlord concerning the Master Lease and intends to continue these negotiations while addressing the non-monetary matters alleged in the September 8, 2025 letter.

Any termination of the Master Lease that deprives the Tenant of the benefit of the continuing right to occupy the Leased Property through the renewal terms of the Master Lease could have a material adverse impact on our results of operations, cash flows and financial position.

Based on our present knowledge of the facts, we do not believe a material loss is probable.

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 $ 108,982,000 and $ 103,616,000 at June 30, 2025 and December 31, 2024, respectively.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 114,032,000 and $ 103,616,000 at September 30, 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.

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Subsequent to the Notice of Declination filing, an underlying qui tam complaint, originally filed on September 12, 2023, was unsealed.

Given that the government has declined to intervene in the Qui Tam Case, the relators have 90 days to effectuate service should they choose to proceed.

Caris denies all allegations and liability in the Qui Tam Case and intends to vigorously defend the matter.

Following the Notice of Declination, the relators filed a Notice of Voluntary Dismissal on September 25, 2025, which concluded the matter.

Governmental Regulations

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Note 17 – Subsequent Events

On July 4, 2025, President Donald Trump signed into law the One Big Beautiful Bill Act (“OBBBA”).

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation.

ASC 740, Income Taxes , requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted.

Consequently, as of the date of enactment, and during the year ended December 31, 2025, the Company will evaluate all deferred tax balances under the newly enacted tax law and identify any other changes required to its financial statements as a result of the OBBBA.

The Company is still evaluating the impact of the OBBBA, and the results of such evaluations will be reflected on the Company’s Form 10 -K for the year ended December 31, 2025.

In October 2025, we sent NHI a notice of our exercise of our option to renew the Master Lease for one five -year term commencing January 1, 2027.

See Note 7 - Long-Term Leases and Note 16 - Contingencies and Commitments for further discussion concerning the Master Lease.

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