What changed in this filing

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Item 1. Business

2026-02-26 compared with 2025-02-28 · 25 added, 41 removed, 323 unchanged (17% of the section changed)

30 unchanged sentences

The services we provide include a comprehensive range of health care services.

In fiscal 2024, 95.7% of our net operating revenues were derived from such health care services.

In fiscal year 2025, 96.8% of our net operating revenues were derived from such health care services.

Highlights of health care services activities during 2025 were as follows:

34 unchanged sentences

Charges for services are paid from private sources without assistance from governmental programs.

Independent living facilities may be licensed and regulated in some states, but do not require the issuance of a CON such as is required for skilled nursing facilities.

Independent living facilities may be licensed and regulated in some states, but do not require the issuance of a CON as is required for skilled nursing facilities.

We have, in several cases, developed independent living facilities adjacent to our nursing facilities.

31 unchanged sentences

We generate revenues from management, accounting and financial services to third party operators of healthcare facilities, from insurance services to our managed healthcare facilities, and from rental income.

In fiscal 2024, 3.5% of our net operating revenues were derived from such sources.

In fiscal year 2025, 3.2% of our net operating revenues were derived from such sources.

The significant sources of our other revenues are described as follows:

9 unchanged sentences

The healthcare properties currently owned and leased to third party operators include nine skilled nursing facilities and one assisted living community.

Government Grant Income.

We received government grant funds as part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES ACT").

The Employee Retention Credit (“ERC”) was established by the CARES Act and intended to help businesses retain their workforce and avoid layoffs during the pandemic.

Government Stimulus Income.

The Employee Retention Credit (“ERC”) was established by the Coronavirus Aid, Relief, and Economic Security Act (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.

1 unchanged sentence

All conditions related to the ERC were met during 2024.

The Company recorded $9,445,000 of government grant income related to the ERC credit for the year ended December 31, 2024.

The Company recorded $11,457,000 of government grant income from the Provider Relief Fund for the year ended December 31, 2022.

The Company recorded $9,445,000 of government stimulus income related to the ERC credit for the year ended December 31, 2024.

Non – Operating Income.

14 unchanged sentences

Placed in Service

Tullahoma, TN

Behavioral Health Hospital

Knoxville, TN

Behavioral Health Hospital

Cedar Bluff, VA

13 unchanged sentences

Wytheville, VA

On August 1, 2024, the Company purchased the White Oak portfolio, including its long-term care pharmacy.

The White Oak portfolio consists of 15 skilled nursing facilities, two assisted living facilities, and four independent living facilities.

On August 1, 2024, the Company purchased the assets of White Oak Management, Inc.

(“White Oak”).

The White Oak portfolio consisted of 15 skilled nursing facilities, two assisted living facilities, four independent living facilities and a long-term care pharmacy.

The White Oak 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.

11 unchanged sentences

Private Pay and Other

We attempt to attract an increased percentage of Medicare and private pay patients by providing rehabilitative and other post–acute care services.

We attempt to attract an increasing percentage of Medicare and private pay patients by providing rehabilitative and other post–acute care services.

These services are designed to speed the patient's recovery and allow the patient to return home as soon as it is practical.

43 unchanged sentences

In some states, approval is also necessary in order to purchase existing health care beds, although the purchaser is normally permitted to avoid a full-scale Certificate of Need application procedure by giving advance written notice of the acquisition and giving written assurance to the state regulatory agency that the change of ownership will not result in a change in the number of beds, services offered and, in some cases, reimbursement rates at the facility.

While there are currently no significant legislative proposals to eliminate Certificates of Need pertaining to skilled nursing care in the states in which we do business, deregulation in the Certificate of Need area would likely result in increased competition and could adversely affect occupancy rates and the supply of licensed and certified personnel.

A significant goal of the federal health care system is to transform the delivery of health care by holding providers accountable for the cost and quality of care provided.

7 unchanged sentences

Department of Health and Human Services ("HHS") has issued rules that govern our use and disclosure of protected health information.

We have established policies and procedures to comply with HIPAA privacy and security requirements.

We have established policies and procedures to comply with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") privacy and security requirements.

We maintain a company-wide HIPAA compliance plan, that we believe complies with the HIPAA privacy and security regulations.

21 unchanged sentences

The rule includes a market basket increase of 3.3%, an increase of 0.6% to the market basket forecast error adjustment, and a negative 0.7% productivity adjustment.

This final rule also changes CMS’ enforcement policies to impose more equitable and consistent civil monetary penalties ("CMPs") for health and safety violations as part of the agency’s ongoing work to increase the safety and care provided in America’s nursing homes.

CMS revised the regulation to expand the type of CMPs that can be imposed to allow for more per instance and per day CMPs to be imposed, as appropriate.

The final rule also finalized updates to the SNF Quality Reporting Program ("QRP") to better account for adverse social conditions that negatively impact individuals’ health or healthcare.

CMS also finalized its proposal to adopt a data validation process for the SNF QRP beginning the same year.

These figures do not incorporate the SNF Value Based Purchasing (“VBP”) reduction for certain SNFs subject to the net reduction in payments under the SNF VBP;

those adjustments are estimated to total $208.4 million in fiscal year 2026.

Medicare is uniform nationwide and reimburses homecare agencies under a Patient-Driven Groupings Model (“PDGM”).

5 unchanged sentences

In November 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates.

CMS projects payments to home health agencies in fiscal year 2025 will increase by 0.5% or $85 million, relative to the prior year.

This increase reflects a 2.7% home health payment update, reduced by a 1.8% decrease that reflects the permanent behavior adjustment and an estimated 0.4% decrease that reflects the updated fixed-dollar loss ratio for outlier payments.

As required by the Bipartisan Budget Act of 2018, this rule proposes a permanent prospective adjustment to the CY2025 home health payment rate to account for the impact of implementing the PDGM.

This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY2020 implementation of PDGM and the change to a 30-day unit of payment.

CMS projects payments to home health agencies in fiscal year 2026 will decrease by 1.3% or $220 million, relative to the prior year.

This increase reflects a 2.4% home health payment update, reduced by a 0.9% decrease that reflects the final permanent adjustment, an estimated 2.7% decrease that reflects the final temporary adjustment, and a 0.1% decrease that reflects the updated fixed-dollar loss ratio for outlier payments.

In addition, CMS is finalizing recalibrated PDGM case-mix weights, updated low-utilization payment adjustment (“LUPA”) thresholds, updated functional impairment levels, and comorbidity adjustment subgroups for 2026.

Medicare payment rates are calculated as daily rates for each of four levels of care we deliver.

11 unchanged sentences

These cap amounts are calculated and published by the Medicare fiscal intermediary on an annual basis.

In July 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates.

In August 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates.

CMS issued a rate increase of 2.6%, or $750 million, effective October 1, 2025.

This increase is the result of a 3.4% market basket increase reduced by a 0.5% productivity adjustment.

This increase results from the proposed 3.3% inpatient hospital market basket percentage increase reduced by a proposed 0.7% point productivity adjustment, required by law.

The FY2026 hospice payment update also includes an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made annually.

The cap amount for FY2025 is $34,465.

The hospice cap amount for FY2026 is $35,361.

Medicaid Legislation and Regulations

9 unchanged sentences

We estimate the resulting increase in revenue for the 2026 fiscal year will be approximately $3,000,000 annually, or $750,000 per quarter.

Additionally, the state of Tennessee implemented non-recurring rate increases for fiscal year 2025 for continued stabilization payments and Medicaid rate rebasing.

These non-recurring rate increases will result in an additional increase in revenue for the 2025 fiscal year of approximately $8,200,000 annually, or $2,050,000 per quarter.

Effective July 1, 2024 and for the fiscal year 2025, the state of Missouri has proposed specific individual nursing facility increases, subject to approval from CMS.

Upon CMS' approval, we estimate the resulting increase in revenue for the 2025 fiscal year will be approximately $6,600,000 annually, or $1,650,000 per quarter.

Effective October 1, 2025 and for the fiscal year 2026, the state of South Carolina has proposed specific individual nursing facility increases.

We estimate the resulting increase in revenue for the 2026 fiscal year will be approximately $4,200,000 annually, or $1,050,000 per quarter.

We have also received from many of the states in which we operate a supplemental Medicaid payment to help mitigate the inflationary labor and healthcare workforce crisis.

3 unchanged sentences

On April 22, 2024, the Centers for Medicare and Medicaid Services (“CMS”) issued the Minimum Staffing Standards for Long-Term Care (“LTC”) Facilities and Medicaid Institutional Payment Transparency Reporting final rule.

Included in this final rule are new comprehensive minimum nurse staffing requirements, which aim to significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities.

CMS is finalizing a total nurse staffing standard of 3.48 hours per resident day (“HPRD”), which must include at least 0.55 HPRD of direct registered nurse (“RN”) care and 2.45 HPRD of direct nurse aide care.

Facilities may use any combination of nurse staff (RN, licensed practical nurse and licensed vocational nurse, or nurse aide) to account for the additional 0.48 HPRD needed to comply with the total nurse staffing standard.

CMS is also finalizing enhanced facility assessment requirements and a requirement to have an RN onsite 24 hours a day, seven days a week (“24/7”), to provide skilled nursing care.

The 24/7 RN onsite can be the Director of Nursing;

however, they must be available to provide direct resident care.

This final rule provides a staggered implementation timeframe of the minimum nurse staffing standards and a 24/7 RN requirement based on geographic location, as well as possible exemptions for qualifying facilities for some parts of these requirements based on workforce unavailability and other factors.

Included in this final rule were new comprehensive minimum nurse staffing requirements, which aimed to significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities.

The passage of the One Big Beautiful Bill Act (“OBBB”) in July 2025 prohibited the Health and Human Services (“HHS”) from implementing, administering, or enforcing the Minimum Staffing Rule until October 1, 2034.

Furthermore, in December 2025, CMS issued an interim final rule rescinding part of the minimum staffing rule in nursing homes, including the minimum hours per resident day requirement.

In most of the communities in which we operate health care facilities, we compete with other health care facilities in the area.

22 unchanged sentences

We also conduct an "Administrator in Training" course, which is 24 months in duration, for the professional training of skilled nursing facility administrators.

Presently, we have six (two male and four female) full–time individuals in this program.

Presently, we have four (two male and two female) full–time individuals in this program.

Six of our seven regional vice presidents and 59 of our 80 health care center administrators are graduates of this program.

14 unchanged sentences

We are focusing on being more energy efficient and reducing our water use and wastewater discharges while continuing to provide a healthy environment for our patients, partners and visitors.

We have partnered with a company to study and identify areas on our properties that would benefit from lighting upgrades as part of our efforts to reduce energy consumption.

We are committed to adhering to applicable federal, state and local environmental regulations.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business