What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-28 · 116 added, 127 removed, 243 unchanged (50% of the section changed)

27 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

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.

3 unchanged sentences

Other revenues

Government grant income

Net operating revenues and grant income

Net operating revenues

Costs and Expenses:

4 unchanged sentences

Total costs and expenses

Income (loss) before non-operating income

Income (loss) from operations

Non-operating income

Interest expense

Unrealized gains on marketable equity securities

3 unchanged sentences

Other revenues

Net operating revenues

Government stimulus income

Net operating revenues and stimulus income

Costs and Expenses:

4 unchanged sentences

Total costs and expenses

Income (loss) before non-operating income

Income (loss) from operations

Non-operating income

Interest expense

Unrealized gains on marketable equity securities

3 unchanged sentences

Other revenues

Government grant income

Net operating revenues and grant income

Net operating revenues

Costs and Expenses:

3 unchanged sentences

Depreciation and amortization

Recovery of assets

Total costs and expenses

Income before non-operating income

Income (loss) from operations

Non-operating income

Unrealized losses on marketable equity securities

Income (loss) before income taxes

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company’s operations and measure the Company’s performance more consistently across periods.

Therefore, the Company believes this information is meaningful in addition to the information contained in the GAAP presentation of financial information.

The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, stock-based compensation expense, operating results for start-up healthcare operations not at full capacity, acquisition related expenses, the recognition of the employee retention credit, gains on sales of unconsolidated companies, gains on the sale of property and equipment, and impairments or recoveries of long-lived assets is helpful in allowing investors to assess the Company’s operations more accurately.

The operating results for newly opened facilities or agencies not at full capacity include newly constructed healthcare facilities or agencies that are still considered in the start-up phase, which include two hospice agencies for the year ended December 31, 2024.

For the year ended December 31, 2023, included are two behavioral health hospitals, two homecare agencies, and two hospice agencies.

For the year ended December 31, 2022, included are two behavioral health hospitals, one hospice agency, and one homecare agency.

The table below provides reconciliations of GAAP to non-GAAP items ( dollars in thousands, except per share data ):

Year Ended December 31,

Net income attributable to National HealthCare Corporation

Non-GAAP adjustments:

Unrealized (gains) losses on marketable equity securities

Stock-based compensation expense

Operating results for newly-opened operations not at full capacity

Acquisition-related expenses

Employee retention credit

Gain on sale of unconsolidated company

Gain on sale of property and equipment

Impairment (recovery) of assets

Income tax expense (benefit) on non-GAAP adjustments

Non-GAAP Net Income

GAAP diluted earnings per share

Non-GAAP adjustments:

Unrealized (gains) losses on marketable equity securities

Stock-based compensation expense

Operating results for newly-opened operations not at full capacity

Acquisition-related expenses

Employee retention credit

Gain on sale of unconsolidated company

Gain on sale of property and equipment

Impairment (recovery) of assets

Non-GAAP diluted earnings per share

Interest expense

Unrealized gains on marketable equity securities

Income before income taxes

Results of Operations

4 unchanged sentences

Other revenues

Government grant income

Net operating revenues and grant income

Government stimulus income

Net operating revenues and stimulus income

Costs and Expenses:

3 unchanged sentences

Depreciation and amortization

Impairment (recovery) of assets

Total costs and expenses

1 unchanged sentence

Non–operating income

Unrealized gains (losses) on marketable equity securities

Interest expense

Unrealized gains on marketable equity securities

Income before income taxes

6 unchanged sentences

Other revenues

Government grant income

Net operating revenues and grant income

Government stimulus income

Net operating revenues and stimulus income

Costs and Expenses:

3 unchanged sentences

Depreciation and amortization

Impairment (recovery) of assets

Total costs and expenses

1 unchanged sentence

Non–operating income

Unrealized gains (losses) on marketable equity securities

Interest expense

Unrealized gains on marketable equity securities

Income before income taxes

3 unchanged sentences

2025 Compared to 2024

Net operating revenues and grant income for the year ended December 31, 2024 totaled $1,307,382,000 compared to $1,141,544,000 for the year ended December 31, 2023, an increase of 14.5%.

Net operating revenues and stimulus income for the year ended December 31, 2025 totaled $1,517,781,000 compared to $1,307,382,000 for the year ended December 31, 2024, an increase of 16.1%.

The net operating revenues increase was due to an 8.4% increase in same-facility net operating revenues, as well as the August 1, 2024 acquisition of White Oak Manor ("White Oak").

For the year ended December 31, 2025, GAAP net income attributable to NHC was $120,015,000 compared to net income of $101,927,000 for the same period in 2024.

Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $104,067,000 for the year ended December 31, 2025 compared to $76,862,000 for the same period a year ago.

The increase in non-GAAP earnings for the year ended December 31, 2025 compared to 2024 was primarily due to the continued increase in skilled nursing census, skilled nursing per diem increases from some of our governmental payors, the continued reduction of agency staffing expense, and the White Oak operations being accretive to earnings.

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.

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.

Net operating revenues and stimulus income

Net patient revenues totaled $1,469,631,000 in 2025, an increase of $217,872,000, or 17.4%, compared to 2024.

The overall average census in owned and leased skilled nursing facilities for 2025 was 89.7% compared to 88.6% in 2024.

The composite skilled nursing facility per diem increased 4.0% in 2025 compared to 2024.

Medicare and managed care per diem rates increased 5.1% and 3.9%, respectively, in 2025 compared to 2024.

Medicaid and private pay per diem rates increased 3.5% and 6.8%, respectively, in 2025 compared to 2024.

White Oak, acquired on August 1, 2024 and with a full year of operations in 2025, attributed to $227,545,000 in net patient revenues for the year ended December 31, 2025 compared to $96,052,000 for the year ended December 31, 2024.

Also included in net patient revenues for the years ended December 31, 2025 and 2024, respectively, is $7,246,000 and $12,749,000 of supplemental Medicaid payments that were received to help mitigate the healthcare workforce crisis and the inflationary labor market.

Other revenues in 2025 were $48,150,000, an increase of $1,972,000, or 4.3%, as further detailed in Note 3 to our consolidated financial statements.

During the year ended December 31, 2024, the Company recognized $9,445,000 related to the Employee Retention Credit (“ERC”) that 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.

During the second quarter of 2024, all conditions related to the assistance were met and the credit was recognized as government grant income.

Total costs and expenses

Total costs and expenses were $1,389,429,000 for 2025, an increase of $171,942,000, or 14.1%, from $1,217,487,000 in 2024.

Salaries, wages, and benefits increased $110,150,000, or 13.6%, to $921,080,000 in 2025 from $810,930,000 in 2024.

Salaries, wages, and benefits as a percentage of net operating revenues and stimulus income was 60.7% compared to 62.0% for the years ended December 31, 2025 and 2024, respectively.

The White Oak operations attributed to an increase of $87,199,000 in salaries, wages, and benefits for the year ended December 31, 2025 compared to the prior year.

Although we continue to face workforce and labor shortages within all of our operations, we are working diligently to find solutions to reduce and eliminate agency nurse staffing expenses within our healthcare operations.

The labor and workforce shortages have resulted in us contracting with agency nurse staffing companies.

For the year ended December 31, 2025 our agency nurse staffing expenses decreased $9,335,000, or approximately 66.6%, compared to the same period a year ago.

Other operating expenses increased $55,812,000, or 17.4%, to $377,202,000 for the year ended December 31, 2025 compared to $321,390,000 for the prior year.

Other operating expenses as a percentage of net operating revenues and stimulus income was 24.9% and 24.6% for the years ended December 31, 2025 and 2024, respectively.

The White Oak operations attributed to an increase of $32,737,000 in other operating expenses for the year ended December 31, 2025 compared to the prior year.

We have also incurred unfavorable claims activity within our professional liability captive insurance company during 2025.

The unfavorable claims activity resulted in additional other operating expenses of $17,563,000 for the year ended December 31, 2025 compared to the same period a year ago.

During the second quarter of 2025, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new entity.

The fair value of the land contributed to the new entity was $5,625,000.

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

This gain was netted with other operating expenses resulting in a decrease of $3,606,000 in other operating expenses as compared to the same period in the prior year.

Facility rent expense increased $3,045,000, or 7.1%, to $46,227,000 in 2025.

Depreciation and amortization increased 7.0% to $44,920,000 in 2025.

Interest expense increased $2,236,000 to $6,371,000 in 2025 from $4,135,000 in 2024 related to the outstanding long-term debt due to the White Oak acquisition in August 2024.

Non–operating income decreased by $1,583,000, or 8.0% to $18,107,000 in 2025 compared to the prior year, as further detailed in Note 4 to our consolidated financial statements.

We recorded unrealized gains in the amount of $22,344,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2025.

The marketable equity securities portfolio consists mainly of publicly-traded healthcare REIT’s and other blue-chip public companies held within our insurance companies.

The income tax provision for 2025 is $39,826,000 (an effective income tax rate of 24.5%).

2024 Compared to 2023

Net operating revenues and stimulus income for the year ended December 31, 2024 totaled $1,307,382,000 compared to $1,141,544,000 for the year ended December 31, 2023, an increase of 14.5%.

The net operating revenues increase was primarily driven by the August 1, 2024 acquisition of White Oak Manor ("White Oak").

For the year ended December 31, 2024, GAAP net income attributable to NHC was $101,927,000 compared to net income of $66,798,000 for the same period in 2023.

Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $76,862,000 for the year ended December 31, 2024 compared to $54,934,000 for the same period a year ago.

Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $76,862,000 for the year ended December 31, 2024 compared to $54,934,000 for the same period a year ago.

The increase in non-GAAP earnings for the year ended December 31, 2024 compared to 2023 was primarily due to the skilled nursing per diem increases from some of our government payors, the continued reduction of nurse agency staffing expense within our operations, and the White Oak operations being accretive to earnings.

20 unchanged sentences

Total costs and expenses were $1,217,487,000 for 2024, an increase of $133,401,000, or 12.3%, from $1,084,086,000 in 2023.

Salaries, wages, and benefits increased $98,586,000, or 13.8%, to $810,930,000 from $712,344,000.

Salaries, wages, and benefits increased $98,586,000, or 13.8%, to $810,930,000 in 2024 from $712,344,000 in 2023.

Salaries, wages, and benefits as a percentage of net operating revenues and grant income was 62.0% compared to 62.4% for the years ended December 31, 2024 and 2023, respectively.

11 unchanged sentences

We continue to face inflationary pressures in certain categories within other operating expenses as well, such as food/dietary supplies and drugs/pharmaceutical supplies.

Facility rent expense increased $1,657,000, or 4.0%, to $43,182,000.

Depreciation and amortization decreased 0.1% to $41,985,000.

Facility rent expense increased $1,657,000, or 4.0%, to $43,182,000 in 2024.

Depreciation and amortization decreased 0.1% to $41,985,000 in 2024.

Interest expense increased $3,811,000 to $4,135,000 in 2024 from $324,000 in 2023.

1 unchanged sentence

In 2023, we didn't have any outstanding long-term debt.

Non–operating income increased by $3,030,000, or 18.2% to $19,690,000 compared to the prior year, as further detailed in Note 5 to our consolidated financial statements.

We recorded unrealized gains in the amount of $30,958,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2024.

The marketable equity securities portfolio consists mainly of publicly-traded healthcare REIT’s and other blue-chip public companies held within our insurance companies.

The income tax provision for 2024 is $34,322,000 (an effective income tax rate of 25.2%).

2023 Compared to 2022

Net operating revenues and grant income for the year ended December 31, 2023 totaled $1,141,544,000 compared to $1,085,738,000 for the year ended December 31, 2022, an increase of 5.1%.

Excluding the government grant income and the seven skilled nursing facilities in Massachusetts and New Hampshire in which we ceased operations in September 2022, same-facility net operating revenues increased 11.3% in 2023 as compared to the prior year.

The net operating revenues increase was primarily driven by the continued occupancy increase in our skilled nursing facilities and increases in skilled nursing per diems from some of our governmental payors.

For the year ended December 31, 2023, GAAP net income attributable to NHC was $66,798,000 compared to net income of $22,445,000 for the same period in 2022.

Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $54,934,000 for the year ended December 31, 2023 compared to $37,323,000 in the prior year.

The increase in non-GAAP earnings for the year ended December 31, 2023 compared to the same period in the prior year was primarily due to the continued occupancy increase in our skilled nursing facilities, skilled nursing per diem increases from some of our government payors, and the continued reduction of nurse agency staffing expense within our operations.

Net operating revenues and grant income

Net patient revenues totaled $1,087,614,000 in 2023, an increase of $58,529,000, or 5.7%, compared to the prior year.

The overall average census in owned and leased skilled nursing facilities for 2023 was 87.9% compared to 83.8% in 2022.

The composite skilled nursing facility per diem increased 6.7% in 2023 compared to 2022.

Medicare and managed care per diem rates increased 3.3% and 5.9%, respectively, in 2023 compared to 2022.

Medicaid and private pay per diem rates increased 9.4% and 5.5%, respectively, in 2023 compared to 2022.

New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, two behavioral health hospitals, two hospice agencies and two homecare agencies, have attributed to an increase of $25,821,000 in net patient revenues for the year ended December 31, 2023 compared to the prior year.

In September 2022, the Company transferred the operations of seven skilled nursing facilities located in Massachusetts and New Hampshire, which resulted in net patient revenues decreasing $48,820,000 for the year ended December 31, 2023 compared to the prior year.

Included in net patient revenues for the years ended December 31, 2023 and 2022, respectively, is $20,214,000 and $19,442,000 of supplemental Medicaid payments that were received to help mitigate the inflationary labor and medical supplies costs caused by the pandemic.

Other revenues in 2023 were $53,930,000, an increase of $8,734,000, or 19.3%, as further detailed in Note 4 to our consolidated financial statements.

In December 2023, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new joint venture.

The fair value of the land contributed to the entity was $8,000,000 and the related cost basis in the land was $1,770,000, which resulted in a gain of $6,230,000.

For the years ended December 31, 2023 and 2022, respectively, we recorded $0 and $11,457,000 in government grant income related to funds received from the CARES Act Provider Relief Fund.

Total costs and expenses

Total costs and expenses for 2023 increased $30,568,000, or 2.9%, to $1,084,410,000 from $1,053,842,000 in 2022.

Salaries, wages, and benefits increased $26,175,000, or 3.8%, to $712,344,000 from $686,169,000.

Salaries, wages, and benefits as a percentage of net operating revenues and grant income was 62.4% compared to 63.2% for the years ended December 31, 2023 and 2022, respectively.

We continue to face workforce and labor shortages within all of our operations.

The labor and workforce shortages have resulted in us contracting with agency nurse staffing companies.

The agency nurse staffing companies charge inflated hourly rates;

therefore, we are working diligently to find solutions to reduce and eliminate the agency nurse staffing within our healthcare operations.

For the year ended December 31, 2023 our agency nurse staffing expenses decreased $30,682,000, or approximately 44.5%, compared to the prior year.

New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, two behavioral health hospitals, two hospice agencies and two homecare agencies, have attributed to an increase in salaries, wages, and benefits of $13,565,000 for the year ended December 31, 2023 compared to the prior year.

In September 2022, the Company transferred the operations of seven skilled nursing facilities located in Massachusetts and New Hampshire, which resulted in salaries, wages, and benefits decreasing $31,920,000 for the year ended December 31, 2023 compared to the prior year.

Other operating expenses decreased $1,189,000, or 0.4%, to $288,183,000 for the year ended December 31, 2023 compared to $289,372,000 for the prior year.

Other operating expenses as a percentage of net operating revenues and grant income was 25.2% and 26.7% for the years ended December 31, 2023 and 2022, respectively.

The ten new operations listed above attributed to an increase in other operating expenses of $9,082,000 for the year ended December 31, 2023 compared to the prior year.

The transfer of the operations of the seven skilled nursing facilities located in Massachusetts and New Hampshire, as noted above, resulted in other operating expenses decreasing $15,025,000 for the year ended December 31, 2023 compared to the prior year.

Facility rent expense increased $548,000, or 1.3%, to $41,525,000.

Depreciation and amortization increased 3.8% to $42,034,000.

Interest expense decreased $239,000 to $324,000 in 2023 from $563,000 in 2022.

At December 31, 2023, we have no outstanding long-term debt.

Non–operating income increased by $5,519,000, or 49.5% to $16,660,000 compared to the prior year, as further detailed in Note 5 to our consolidated financial statements.

Non–operating income increased by $3,030,000, or 18.2% to $19,690,000 in 2024 compared to the prior year, as further detailed in Note 5 to our consolidated financial statements.

We recorded unrealized gains in the amount of $30,958,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2024.

1 unchanged sentence

The income tax provision for 2024 is $34,322,000 (an effective income tax rate of 25.2%).

Non-GAAP Financial Presentation

Therefore, the Company believes this information is meaningful in addition to the information contained in the GAAP presentation of financial information.

Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, stock-based compensation expense, gains on sale of property and equipment, operating results for start-up healthcare operations not at full capacity, acquisition related expenses, the recognition of the employee retention credit, and gains on sales of unconsolidated companies is helpful in allowing investors to assess the Company’s operations more accurately.

The table below provides reconciliations of GAAP to non-GAAP items ( dollars in thousands, except per share data ):

Year Ended December 31,

Net income attributable to National HealthCare Corporation

Non-GAAP adjustments:

Unrealized gains on marketable equity securities

Stock-based compensation expense

Gain on sale of property and equipment

Operating results for newly-opened operations not at full capacity

Acquisition-related expenses

Employee retention credit

Gain on sale of unconsolidated company

Income tax expense on non-GAAP adjustments

Non-GAAP Net Income

GAAP diluted earnings per share

Non-GAAP adjustments:

Unrealized gains on marketable equity securities

Stock-based compensation expense

Gain on sale of property and equipment

Operating results for newly-opened operations not at full capacity

Acquisition-related expenses

Employee retention credit

Gain on sale of unconsolidated company

Income tax expense on non-GAAP adjustments

Non-GAAP diluted earnings per share

Liquidity, Capital Resources and Financial Condition

9 unchanged sentences

Cash used in investing activities

Cash provided by / (used in) financing activities

Cash (used in) / provided by financing activities

Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period

2 unchanged sentences

Cash provided by operating activities consisted of net income of $122,606,000 and adjustments for non–cash items of $30,244,000.

There was cash used for working capital needs in the amount of $25,717,000 for the year ended December 31, 2024, which was primarily driven by the White Oak acquisition.

In 2023, there was cash provided by working capital in the amount of $17,396,000.

Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized losses on our marketable equity securities, gain on the sale of an unconsolidated company, deferred taxes, and stock compensation.

There was cash provided by working capital needs in the amount of $33,395,000 for the year ended December 31, 2025.

In 2024, there was cash used for working capital in the amount of $25,717,000.

Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized gains on our marketable equity securities, gain on the sale of property and equipment, deferred taxes, and stock compensation.

Investing Activities

Net cash used in investing activities totaled $33,858,000 for the year ended December 31, 2025, as compared to $236,693,000 and $17,568,000 for the years ended December 31, 2024 and 2023, respectively.

On August, 1, 2024, the acquisition of White Oak resulted in cash used of $215,896,000, as described in Note 2 to our consolidated financial statements.

Cash used for property and equipment additions was $36,446,000, $27,600,000, and $27,901,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

For the year ended December 31, 2024, we contributed capital of $14,298,000 to a joint venture, multi-family development that is under construction in Franklin, Tennessee.

In January 2024, the Company sold its 50% joint venture ownership interest in a homecare agency resulting in proceeds from the sale of $2,100,000.

For the year ended December 31, 2025, we contributed capital of $5,629,000 for two joint venture, multi-family developments that are under construction in Nashville, Tennessee compared to $14,298,000 for the same period in the prior year.

Proceeds from the sale of marketable securities, net of purchases, resulted in cash proceeds of $7,705,000, $16,913,000, and $17,895,000 in 2025, 2024, and 2023, respectively.

On August 1, 2024, the acquisition of White Oak Senior Living resulted in cash used of $215,896,000.

In January 2024, the Company sold its ownership interest in a homecare agency resulting in proceeds from the sale of $2,100,000.

Financing Activities

Net cash used in financing activities totaled $135,955,000 for the year ended December 31, 2025.

Net cash provided by financing activities totaled $100,344,000 for the year ended December 31, 2024.

Net cash used in financing activities totaled $42,545,000 and $47,642,000 for the years ended December 31, 2023 and 2022, respectively.

The funding for the White Oak acquisition was provided by the Company’s cash on hand and borrowings of $150,000,000.

During the third and fourth quarters of 2024, cash of $13,000,000 was used to pay down the outstanding principal balance of the long-term debt.

Net cash used in financing activities totaled $42,545,000 for the year ended December 31, 2023.

Cash used to pay down the outstanding principal balance of our long-term debt was $97,000,000 and $13,000,000 for the years ended December 31, 2025 and 2024, respectively.

Dividends paid to common stockholders was $38,704,000, $36,964,000, and $35,560,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

1 unchanged sentence

We repurchased common shares outstanding in the amount of $14,730,000, $13,502,000, and $2,482,000 for the years ended December 31, 2025, 2024, and 2023, respectively.

Principal payments made under finance lease obligations was $860,000, $4,985,000, and $4,695,000 for the years ended December 31, 2024, 2023, and 2022, respectively.

The finance lease obligations terminated during the first quarter of 2024.

In 2024, the funding for the White Oak acquisition was provided by the Company’s cash on hand and borrowings under the credit facility of $150,000,000.

Short – term liquidity

6 unchanged sentences

We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities.

Our ability to obtain long-term debt to meet our long–term contractual obligations and to finance our operating requirements, growth and development plans will depend upon our future performance.

Our ability to meet our long–term contractual obligations and to finance our operating requirements, growth and development plans will depend upon our future performance.

Our future performance will be affected by business, economic, financial and other factors, including potential changes in state and federal government payment rates for health care, customer demand, success of our marketing efforts, pressures from competitors, and the state of the economy, including the state of financial and credit markets, as well as many unforeseen factors.

25 unchanged sentences

Credit losses are recorded as bad debt expense, which is included as a component of other operating expenses in the consolidated statements of operations.

Revenue Recognition – Third Party Payors

Medicare and Medicaid program revenues, as well as certain Managed Care program revenues, are subject to audit and retroactive adjustment by government representatives or their agents.

Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care.

These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved.

In our opinion, adequate provision has been made for any adjustments that may result from these reviews.

Any differences between our original estimates of reimbursements and subsequent revisions are reflected in operations in the period in which the revisions are made often due to final determination or the period of payment no longer being subject to audit or review.

Accrued Risk Reserves

13 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 7. Management’s Discussion and Analysis