What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-02-28 · 260 added, 192 removed, 1061 unchanged (30% of the section changed)

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of National HealthCare Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2025, expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheet of National HealthCare Corporation (the "Company") as of December 31, 2025 , the related consolidated statements of operations , comprehensive income, equity, and cash flows, for the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and the results of its operations and its cash flows for the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimation of Professional Liability Claims Reserves

Description of the Matter

The Company’s accrued risk reserves totaled $103,616,000 as of December 31, 2024.

As described in Note 17 to the consolidated financial statements, the accrued risk reserves include professional liability claims reserves for unpaid reported professional liability claims and estimates for incurred but unreported claims.

The Company’s policy with respect to the professional liability claims reserves is to use an actuary to assist management in estimating the exposure for claims obligations (for both asserted and unasserted claims).

Auditing management’s professional liability claims reserves was complex and highly judgmental due to the significant estimation required in determining the reserves, particularly the assumptions of the severity of asserted claims and the quantity and severity of unknown claims.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the effectiveness of controls over the Company’s professional liability claims reserve determination, including controls over management’s review of the significant assumptions described above.

For example, we tested controls over management’s review of the actuarial analysis, the significant actuarial assumptions and the data inputs provided to the actuary.

To test the professional liability claims reserves, our audit procedures included, among others, testing the completeness and accuracy of the underlying claims data provided to the Company’s actuarial specialist, obtaining legal confirmation letters to evaluate inclusion of significant litigated matters in the claims data, and reviewing the Company's insurance contracts by policy year to assess the Company's self-insured retentions, deductibles, and coverage limits.

In addition, we involved our actuarial specialists to assist in our evaluation of the methodologies applied by management's specialist and assessing the accuracy of the Company’s reserves.

We also compared the reserves recorded to a range developed by our actuarial specialists based on independently selected assumptions.

/s/ Ernst & Young LLP

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimation of Accrued Risk Reserves - General and Professional Liability Claims — Refer to Note 16 ⁠ to the financial statements

Critical Audit Matter Description

The Company has retained significant self–insured risk for general and professional liability claims related to patient care and treatment.

The accrued risk reserves include a liability for reported claims and estimates for projections of asserted and unasserted claims.

The Company uses independent actuaries to assist management in estimating the claims obligations (for both asserted and unasserted claims) related to exposures in excess of coverage limits.

Such estimates are based on many variables including historical and statistical information and other factors.

We identified the evaluation of the Company's accrued risk reserves for professional liability claims as a critical audit matter because the projection of settlement values for reported and unreported claims involves significant estimation by management.

Auditing whether reserves for professional liability claims were appropriately recorded as of December 31, 2025 required a high degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimation of accrued risk reserves for professional liability claims include the following, among others:

· Tested the effectiveness of management’s internal controls over the estimation of professional liability claims, including those over the projection of obligations for asserted and unasserted claims.

· Obtained and reviewed the Company’s insurance policies and compared the coverage and terms to the assumptions used by management.

· Tested the underlying data that served as the basis for the actuarial analysis, including historical claims, to test that the inputs to the actuarial estimate were accurate and complete.

· With the assistance of our actuarial specialists, evaluated the methods and assumptions used by management to estimate the self-insurance reserves for general and professional liability claims by:

• Performing a retrospective review by comparing management’s prior year estimate to reported and paid losses for professional claims in the current year.

• Developing an independent range of estimated losses for the general and professional liability reserve and comparing management's estimate to our estimated independent range.

/s/ Deloitte & Touche LLP

Nashville, Tennessee

February 26, 2026

We have served as the Company's auditor since 2025.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of National HealthCare Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of National HealthCare Corporation (the Company) as of December 31, 2024, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company's auditor from 2009 to 2025.

Nashville, Tennessee

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Net patient revenues

$ 1,469,631 $ 1,251,759 $ 1,087,614

Other revenues

Government grant income

Net operating revenues and grant income

48,150 46,178 53,930

Government stimulus income

Net operating revenues and stimulus income

1,517,781 1,307,382 1,141,544

Costs and expenses:

Salaries, wages and benefits

921,080 810,930 712,344

Other operating

377,202 321,390 288,183

Facility rent

46,227 43,182 41,525

Depreciation and amortization

Recovery of note receivable

44,920 41,985 42,034

Total costs and expenses

1,389,429 1,217,487 1,084,086

Income from operations

Other income:

128,352 89,895 57,458

Other income (expense):

Non-operating income

Unrealized gains (losses) on marketable equity securities

18,107 19,690 16,660

Interest expense

( 6,371 ) ( 4,135 ) ( 324 )

Unrealized gains on marketable equity securities

22,344 30,958 14,944

Income before income taxes

162,432 136,408 88,738

Income tax provision

( 39,826 ) ( 34,322 ) ( 23,450 )

122,606 102,086 65,288

Net (income) loss attributable to noncontrolling interest

( 2,591 ) ( 159 ) 1,510

Net income attributable to National HealthCare Corporation

$ 120,015 $ 101,927 $ 66,798

Earnings per share attributable to National HealthCare Corporation stockholders:

$ 7.76 $ 6.62 $ 4.36

$ 7.67 $ 6.53 $ 4.34

Weighted average common shares outstanding:

15,472,185 15,393,782 15,310,142

15,646,338 15,598,528 15,377,343

Dividends declared per common share

$ 2.53 $ 2.42 $ 2.34

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

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Year Ended December 31,

Other comprehensive income (loss):

Unrealized gains (losses) on investments in marketable debt securities

Reclassification adjustment for realized losses (gains) on sale of marketable debt securities

Income tax (expense) benefit related to items of other comprehensive income (loss)

Other comprehensive income (loss), net of tax

$ 122,606 $ 102,086 $ 65,288

Other comprehensive income:

Unrealized gains on investments in marketable debt securities

3,937 909 3,434

Reclassification adjustment for realized losses on sale of marketable debt securities

Income tax expense related to items of other comprehensive income

( 660 ) ( 409 ) ( 523 )

Other comprehensive income, net of tax

3,937 1,888 2,928

Net (income) loss attributable to noncontrolling interest

( 2,591 ) ( 159 ) 1,510

Comprehensive income attributable to National HealthCare Corporation

$ 123,952 $ 103,815 $ 69,726

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

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Cash and cash equivalents

$ 92,829 $ 76,121

Restricted cash and cash equivalents, current portion

18,118 19,568

Marketable equity securities

Marketable debt securities

162,972 140,064

Restricted marketable equity securities

17,197 23,190

Restricted marketable debt securities, current portion

18,062 11,529

Accounts receivable

139,002 135,325

Prepaid expenses and other assets

Notes receivable

Total current assets

461,820 424,408

Property and Equipment:

Property and equipment, at cost

1,308,891 1,281,736

Accumulated depreciation and amortization

( 635,094 ) ( 597,447 )

Net property and equipment

673,797 684,289

Other Assets:

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Restricted marketable debt securities, less current portion

105,231 108,275

Deposits and other assets

Operating lease – right-of-use assets

47,778 79,167

170,478 170,478

Intangible assets

19,864 19,864

Investments in unconsolidated companies

38,733 27,878

Total other assets

390,802 415,732

$ 1,526,419 $ 1,524,429

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

6 unchanged sentences

$ 22,767 $ 25,493

Finance lease obligations, current portion

Operating lease liabilities, current portion

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Long-term debt

32,500 129,500

Operating lease liabilities, less current portion

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Cash Flows From Operating Activities:

$ 122,606 $ 102,086 $ 65,288

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

44,920 41,985 42,034

Equity in earnings of unconsolidated investments

( 218 ) ( 589 ) ( 2,015 )

Distributions from unconsolidated investments

Unrealized (gains) losses on marketable equity securities

Unrealized gains on marketable equity securities

( 22,344 ) ( 30,958 ) ( 14,944 )

(Gains) losses on sale of marketable securities

( 1,167 ) ( 1,093 ) 667

Gain on sale of unconsolidated company

– ( 1,024 ) –

Gain on sale of property and equipment

Impairment (recovery) of assets

( 3,606 ) – ( 6,230 )

Deferred income taxes

6,477 17,941 5,768

Stock–based compensation

4,399 4,160 2,782

Changes in operating assets and liabilities:

Accounts receivable

( 3,677 ) ( 26,441 ) ( 8,559 )

1,244 ( 599 ) ( 298 )

Prepaid expenses and other assets

4,574 6,283 ( 669 )

Operating lease obligations

695 273 ( 1,244 )

Trade accounts payable

( 2,726 ) 6,299 2,236

Accrued payroll

11,198 4,951 11,600

Amounts due to third party payors

( 1,612 ) ( 3,018 ) 1,738

Accrued risk reserves

Provider relief funds

Contract liabilities

17,979 357 790

Other current liabilities

4,600 ( 3,349 ) 5,376

Other noncurrent liabilities

1,120 ( 10,473 ) 6,426

Net cash provided by operating activities

185,078 107,303 111,216

Cash Flows From Investing Activities:

Purchases of property and equipment

( 36,446 ) ( 27,600 ) ( 27,901 )

Acquisition of White Oak Manor, net of cash acquired

Acquisition of other businesses, net of cash acquired

– ( 215,896 ) –

Investments in unconsolidated companies

Proceeds from sale of assets

(Investments in) collections of notes receivable

( 5,629 ) ( 14,298 ) ( 4,661 )

Purchases of marketable securities

( 65,188 ) ( 35,057 ) ( 29,501 )

Sale of marketable securities

72,893 51,970 47,396

Collections of (investments in) notes receivable

512 ( 9 ) ( 201 )

Acquisition of other businesses, net of cash acquired

– 2,097 ( 2,700 )

Proceeds from sale of assets

Net cash used in investing activities

( 33,858 ) ( 236,693 ) ( 17,568 )

Cash Flows From Financing Activities:

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Repayments under credit facility

Debt issuance costs

Principal payments under finance lease obligations

( 97,000 ) ( 13,000 ) –

Dividends paid to common stockholders

( 38,704 ) ( 36,964 ) ( 35,560 )

Issuance of common shares

14,214 14,268 313

Repurchase of common shares

( 14,730 ) ( 13,502 ) ( 2,482 )

Noncontrolling interest contributions

Entrance fee deposits (refunds)

Net cash provided by / (used in) financing activities

115 ( 313 ) 169

Debt issuance costs

Principal payments under finance lease obligations

– ( 860 ) ( 4,985 )

Net cash (used in) / provided by financing activities

( 135,955 ) 100,344 ( 42,545 )

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

15,265 ( 29,046 ) 51,103

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Beginning of Period

96,922 125,968 74,865

Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, End of Period

$ 112,187 $ 96,922 $ 125,968

Balance Sheet Classifications:

Cash and cash equivalents

$ 92,829 $ 76,121 $ 107,076

Restricted cash and cash equivalents

19,358 20,801 18,892

Total Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

$ 112,187 $ 96,922 $ 125,968

NATIONAL HEALTHCARE CORPORATION

4 unchanged sentences

Cash payments for interest

$ 7,030 $ 3,416 $ 290

Cash payments for income taxes

$ 24,719 $ 17,525 $ 14,571

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

3 unchanged sentences

Comprehensive

Income (Loss)

Balance at January 1, 2023

1 unchanged sentence

– – – 66,798 – ( 1,510 ) 65,288

Contributions attributable to noncontrolling interest

– – – – – 250 250

Other comprehensive loss

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– – – 101,927 – 159 102,086

Contributions attributable to noncontrolling interest

– – – – – 1,115 1,115

Other comprehensive income

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The Company presents the amount of consolidated net income that is attributable to NHC and the noncontrolling interest in its consolidated statements of operations.

Variable interest entities (“VIEs”) in which we have an interest have been consolidated when we have been identified as the primary beneficiary.

Investments in ventures in which we have the ability to exercise significant influence but do not have control over are accounted for using the equity method.

Equity method investments are initially recorded at cost and subsequently are adjusted for our share of the venture’s earnings or losses and cash distributions.

Investments in entities in which we lack the ability to exercise significant influence are included in the consolidated financial statements at cost unless there has been a decline in the market value of our investment that is deemed to be other than temporary.

Use of Estimates

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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 consolidated statements of operations.

Bad debt expense was $ 8,831,000 , $ 7,424,000 , and $ 4,711,000 for years ended December 31, 2024, 2023, and 2022, respectively.

As of December 31, 2024, and 2023, the Company has recorded allowance for doubtful accounts of $ 9,702,000 and $ 8,054,000 , respectively, as our best estimate of probable 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

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The primary facility costs include utilities and property insurance.

In 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 .

The gain has been included as a reduction of “other operating expenses” in the consolidated financial statement of operations.

General and Administrative Costs

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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 $ 27,498,000 , $ 26,236,000 , and $ 21,412,000 for the years ended December 31, 2025, 2024, and 2023, respectively.

Included in general and administrative costs during 2024 are acquisition-related expenses for the White Oak Senior Living portfolio.

See Note 2 - Acquisition of White Oak Senior Living for additional detail regarding the acquisition.

Cash and Cash Equivalents

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Inventories consist generally of food and supplies and are valued at the lower of cost or market, with cost determined on a first–in, first–out (FIFO) basis.

Mortgage and Other Notes Receivable

In accordance with ASC Topic 310, Receivables , NHC evaluates the carrying values of its mortgage and other notes receivable on an instrument-by-instrument basis.

On a quarterly basis, NHC reviews its notes receivable for recoverability when events or circumstances, including the non–receipt of contractual principal and interest payments, significant deteriorations of the financial condition of the borrower and significant adverse changes in general economic conditions, indicate that the carrying amount of the note receivable may not be recoverable.

If necessary, impairment is measured as the amount by which the carrying amount exceeds the discounted cash flows expected to be received under the note receivable or, if foreclosure is probable, the fair value of the collateral securing the note receivable.

For the year ended December 31, 2022, the Company recorded a recovery of a note receivable of $ 3,728,000 due to the borrower paying off the note.

The recovery of the note receivable is recorded in the consolidated statements of operations under the line item “recovery of note receivable”.

Property and Equipment

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If recognition of impairment is necessary, it is measured as the amount by which the carrying amount of the property exceeds the estimated fair value of the property.

Investments in Unconsolidated Companies

We use the equity method to account for our investments in joint ventures in which we have the ability to exercise significant influence.

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

As of December 31, 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

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Long-Term Leases

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

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, and pharmacy warehouses.

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

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Concentration of Credit Risks

Our credit risks primarily relate to cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, marketable securities, restricted marketable securities and notes receivable.

Our credit risks primarily relate to cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, marketable securities, and restricted marketable securities.

Cash and cash equivalents are primarily held in bank accounts and overnight investments.

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Marketable securities and restricted marketable securities are held primarily in accounts with brokerage institutions.

Notes receivable relate primarily to secured loans with health care facilities.

At any point in time we have funds in our operating accounts and restricted cash accounts that are with third party financial institutions.

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While we monitor the cash balances in our operating accounts, these cash and restricted cash balances could be impacted if the underlying financial institutions fail or could be subject to other adverse conditions in the financial markets.

Our financial instruments, principally our notes receivable, are subject to the possibility of loss of the carrying values as a result of the failure of other parties to perform according to their contractual obligations.

We obtain various collateral and other protective rights, and continually monitor these rights in order to reduce such possibilities of credit loss.

Our financial instruments are subject to the possibility of loss of the carrying values as a result of the failure of other parties to perform according to their contractual obligations.

We evaluate the need to provide reserves for potential credit losses on our financial instruments based on management's periodic review of the portfolio on an instrument-by-instrument basis.

Recently Adopted 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 and interim periods within fiscal years beginning after December 15, 2024.

The Company has adopted the standard and has included the appropriate disclosures in our notes to the financial statements.

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 disclose 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, with early adoption permitted and may be applied prospectively or retrospectively to prior periods.

The Company has adopted the standard prospectively and has included the appropriate disclosures in our notes to the financial statements.

Recent Accounting Guidance Not Yet Adopted

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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 December 2023, the FASB issued ASU 2023 - 09 " Income Taxes (Topic 740 ):

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

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

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.

3 unchanged sentences

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.

Note 2 – 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 , subject to the adjustments set forth in the agreement.

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 purchase price allocation.

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

The following table summarizes the allocation of the purchase price as of the transaction’s closing date ( in thousands ):

Cash and cash equivalents

Prepaid expenses and other assets

Property and equipment

Operating lease right-of-use assets

Intangible assets

Total assets acquired

Operating lease liabilities, current portion

Accrued payroll

Other current liabilities

Operating lease liabilities, less current portion

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 year ended December 31, 2024, White Oak contributed net operating revenues of $ 96,065,000 and income before income taxes of $ 4,974,000 that are included in the Company’s statements of operations.

The Company recognized $ 3,266,000 in acquisition-related expenses for the year ended December 31, 2024 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 consolidated statements of operations.

The following table contains unaudited pro forma consolidated statements of operations information for the years ended December 31, 2024, 2023, and 2022, assuming the White oak acquisition closed on January 1, 2022 (in thousands) .

Year Ended December 31,

Net operating revenues and grant income

$ 1,434,768 $ 1,342,207 $ 1,273,974

Income before income taxes

140,779 86,698 22,213

Net income attributable to NHC

$ 105,321 $ 63,778 $ 16,264

Note 2 – Net Patient Revenues

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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.

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Additionally, we sublease four Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”) as noted in Note 6 – 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.

Rental income reflected in the consolidated statements of operations consisted of the following (in thousands) :

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See Note 17 regarding our relationship with National.

During 2024, 2023 and 2022, we recognized approximately $ 5,643,000 , $ 5,200,000 , and $ 4,332,000 , respectively, of management fees and interest on management fees.

During 2025, 2024 and 2023, we recognized approximately $ 5,799,000 , $ 5,643,000 , and $ 5,200,000 , respectively, of management fees and interest on management fees from National.

Unrecognized and unpaid management fees and interest on management fees from National total $ 18,730,000 and $ 18,975,000 at December 31, 2025 and 2024, respectively.

19 unchanged sentences

Year Ended December 31,

Equity in earnings of unconsolidated investments

Interest income

$ 9,844 $ 10,104 $ 8,383

1 unchanged sentence

8,045 7,973 6,262

Interest income

Equity in earnings of unconsolidated investments

218 589 2,015

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.

5 unchanged sentences

1,467 – 46,683 48,150

Government grant income

– – 9,445 9,445

Net operating revenues and grant income

Net operating revenues

1,317,012 154,086 46,683 1,517,781

8 unchanged sentences

41,066 581 3,273 44,920

4,135 – – 4,135

Total costs and expenses

1,189,261 124,026 76,142 1,389,429

Income (loss) before non-operating income

Income (loss) from operations

127,751 30,060 ( 29,459 ) 128,352

1 unchanged sentence

– – 18,107 18,107

Interest expense

( 6,371 ) – – ( 6,371 )

Unrealized gains on marketable equity securities

7 unchanged sentences

1,315 – 44,863 46,178

Net operating revenues

Government stimulus income

– – 9,445 9,445

Net operating revenues and stimulus income

1,112,615 140,459 54,308 1,307,382

Costs and Expenses:

9 unchanged sentences

1,020,671 114,671 82,145 1,217,487

Income (loss) before non-operating income

Income (loss) from operations

91,944 25,788 ( 27,837 ) 89,895

1 unchanged sentence

– – 19,690 19,690

Interest expense

( 4,135 ) – ( 4,135 )

Unrealized gains on marketable equity securities

7 unchanged sentences

1,141 – 52,789 53,930

Government grant income

11,457 – – 11,457

Net operating revenues and grant income

Net operating revenues

957,218 131,537 52,789 1,141,544

8 unchanged sentences

38,172 786 3,076 42,034

Recovery of assets

– – ( 3,728 ) ( 3,728 )

Total costs and expenses

914,552 107,097 62,437 1,084,086

Income before non-operating income

Income (loss) from operations

42,666 24,440 ( 9,648 ) 57,458

1 unchanged sentence

– – 16,660 16,660

Unrealized losses on marketable equity securities

Interest expense

( 324 ) – – ( 324 )

Income (loss) before income taxes

Unrealized gains on marketable equity securities

– – 14,944 14,944

Income before income taxes

$ 42,342 $ 24,440 $ 21,956 $ 88,738

Note 6 – Long – Term Leases

Operating Leases

At December 31, 2024, we lease from NHI the real property of 28 skilled nursing facilities, five assisted living centers and three independent living centers under one master lease agreement.

At December 31, 2025, we lease from NHI the real property of 32 skilled nursing facilities and three independent living centers under one master 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 was $ 32,625,000 in 2024.

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 lease property as negotiated between the parties, without including any value attributable to improvements to the lease property voluntarily made by us at our expense.

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 16 – Contingencies, Commitments and Other Matters for further discussion of the lease.

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

42 unchanged sentences

For the years ended December 31, 2025, 2024 and 2023, there were no stock options excluded from the calculation of diluted weighted average shares of common stock outstanding.

For the year ended December 31, 2022, 375,638 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 effect.

Note 8 – Investments in Marketable Securities

5 unchanged sentences

$ 30,176 $ 162,972 $ 30,176 $ 140,064

Corporate debt securities

– – 2,497 2,441

Treasury securities

– – 2,990 2,986

Restricted investments available for sale:

25 unchanged sentences

$ 124,010 $ 123,293 $ 125,118 $ 119,804

$ 125,118 $ 119,804 $ 135,338 $ 127,727

Gross unrealized gains related to marketable equity securities are $ 137,436,000 and $ 115,259,000 as of December 31, 2025 and 2024, respectively.

1 unchanged sentence

For the years ended December 31, 2025, 2024, and 2023, the Company recognized net unrealized gains of $ 22,344,000 , $ 30,958,000 , and $ 14,944,000 respectively, in the consolidated statements of operations.

For the year ended December 31, 2022, the Company recognized net unrealized losses of $ 15,806,000 in the consolidated statements of operations.

Gross unrealized gains related to available for sale marketable debt securities are $ 1,464,000 and $ 135,000 as of December 31, 2025 and 2024, respectively.

4 unchanged sentences

Proceeds from the sale of available for sale marketable securities during the years ended December 31, 2025, 2024, and 2023 were $ 72,893,000 , $ 51,970,000 , and $ 47,396,000 , respectively.

Net investment gains of $ 1,093,000 and net investment losses of $ 667,000 and $ 1,326,000 were realized on these sales during the years ended December 31, 2024, 2023, and 2022, respectively.

Net investment gains of $ 1,167,000 and $ 1,093,000 and net investment losses of $ 667,000 were realized on these sales during the years ended December 31, 2025, 2024, and 2023, respectively.

Note 9 – Fair Value Measurements

20 unchanged sentences

The carrying amounts of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short–term nature.

The estimated fair value of notes receivable approximates the carrying value based principally on their underlying interest rates and terms, maturities, collateral and credit status of the receivables.

At December 31, 2025 and 2024, there were no material differences between the carrying amounts and fair values of NHC’s financial instruments.

63 unchanged sentences

3,741 164,554 – 168,295

December 31, 2023

2,183 – – 2,183

December 31, 2024

5,924 164,554 – 170,478

1 unchanged sentence

$ 5,924 $ 164,554 $ – $ 170,478

As part of the White Oak acquisition (Note 2 ) in 2024, we recorded goodwill in the amount of $ 2,183,000 .

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

2 unchanged sentences

$ 19,864 $ 19,864

As part of the White Oak acquisition (Note 2 ) in 2024, we recorded indefinite-lived intangible assets that consisted of the trade name ($ 11,556,000 ) and certificates of need and licenses ($ 1,270,000 ).

Note 12 – Income Taxes

Income before income taxes was as follows (in thousands) :

Year Ended December 31,

United States

$ 162,432 $ 136,408 $ 88,738

Income before income taxes

$ 162,432 $ 136,408 $ 88,738

The provision for income taxes is comprised of the following components (in thousands) :

3 unchanged sentences

7,049 3,490 3,137

Foreign – – –

Total current tax provision

3 unchanged sentences

1,550 4,091 1,651

Foreign – – –

Total deferred tax provision

7 unchanged sentences

Accrued expenses

Tax basis in excess of book basis of fixed assets

Stock based compensation

18 unchanged sentences

Book basis in excess of tax basis of fixed assets

( 10,460 ) ( 6,579 )

Long–term investments

6 unchanged sentences

$ ( 42,687 ) $ ( 35,550 )

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes is as follows (in thousands) :

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes after the adoption of ASU 2023 - 09 is as follows (dollars in thousands) :

Year Ended December 31,

1 unchanged sentence

$ 34,111 21.0 %

State and Local Income Taxes, net of federal benefit (1)

Changes in Valuation Allowances

( 305 ) ( 0.2 )

Nontaxable and Nondeductible Items

( 237 ) ( 0.2 )

Changes in Unrecognized tax benefits

( 389 ) ( 0.2 )

Other Adjustments

( 1,188 ) ( 0.7 )

Effective tax rate

$ 39,826 24.5 %

( 1 ) The states and local jurisdictions that contribute to the majority (greater than 50% ) of the tax effect in this category include Tennessee.

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023 - 09 is as follows (in thousands) :

Year Ended December 31,

Tax provision at federal statutory rate

$ 28,646 $ 18,635

Increase in income taxes resulting from:

State, net of federal benefit

6,349 4,600 1,034

Unrecognized tax benefits

690 1,227 730

Expiration of statute of limitations

1 unchanged sentence

Tax (expense) benefit of noncontrolling interest

( 34 ) 317 518

( 397 ) 162 285

Total increases

5,676 4,815 1,535

Effective income tax expense

1 unchanged sentence

Our deferred tax assets have been evaluated for realization based on historical taxable income, tax planning strategies, the expected timing of reversals of existing temporary differences and future taxable income anticipated.

Our deferred tax assets, with the exception of certain state tax net operating losses and certain deferred tax assets associated with unrealized losses on marketable securities, are more likely than not to be realized in full due to the existence of sufficient taxable income of the appropriate character under the tax law.

As such, the only valuation allowance relates to state net operating losses and unrealized losses on marketable securities.

Our deferred tax assets, with the exception of certain deferred tax assets associated with unrealized losses on marketable securities, are more likely than not to be realized in full due to the existence of sufficient taxable income of the appropriate character under the tax law.

As such, the only valuation allowance relates to unrealized losses on marketable securities.

Uncertain tax positions may arise where tax laws may allow for alternative interpretations or where the timing of recognition of income is subject to judgment.

38 unchanged sentences

federal and state examinations by tax authorities for years before 2022 (with few state exceptions).

The amount of cash income taxes paid by the Company were as follows (in thousands) :

Year Ended December 31,

Tennessee 1,785

Other states 2,246

Total income taxes paid, net

The amount of cash income taxes paid by the Company during the years ended December 31, 2024 and 2023 was $ 17,525,000 and $ 14,571,000 , respectively.

Note 13 – Stock Repurchases

21 unchanged sentences

At December 31, 2025, the Company had $ 5,019,000 of unrecognized compensation cost related to unvested stock-based compensation awards.

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

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

Stock Options

53 unchanged sentences

Interest rate

September 30,

Credit facility, interest payable monthly

2 unchanged sentences

Less current portion

( 7,500 ) ( 7,500 )

Long-term debt, less current portion

13 unchanged sentences

Long–Term Debt

Note 17 – Contingencies and Guarantees

Note 16 – Contingencies, Commitments and Other Matters

National Health Investors, Inc.

As discussed in Note 6 - 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

21 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

Civil Investigative Demand / Qui Tam Complaint

On or about May 21, 2024, Caris Healthcare, L.P.

1 unchanged sentence

Attorney’s Office for the Eastern District of Tennessee.

The CID requests the production of certain medical records for patients at Caris’ Nashville office and other documents related to the billing for hospice services for the period of January 1, 2019, through the date of the CID.

The Company is cooperating with respect to the requests and remains in the process of responding to the CID.

The CID requested the production of certain medical records for patients at Caris’ Nashville office and other documents related to the billing for hospice services for the period of January 1, 2019, through the date of the CID.

The Company cooperated with respect to the requests.

On June 23, 2025, a Notice of Election to Decline Intervention (the “Notice of Declination”) was filed by the United States of America, the State of Tennessee, the Commonwealth of Virginia, and the State of Georgia, in a case styled U.S.

Caris HealthCare, L.P., Case No.

3:23 -CV- 00330, in the U.S.

District Court for the Eastern District of Tennessee (the “Qui Tam Case”).

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

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

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

2 unchanged sentences

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.

Governmental Regulations

25 unchanged sentences

National ’ s Ownership of Our Stock

At December 31, 2024 and 2023, National owns 1,030,887 and 1,084,763 shares, respectively, of our outstanding common stock.

At December 31, 2025 and 2024, National owns 1,030,887 shares of our outstanding common stock.

This accounts for 6.6 % and 6.7 %, respectively, of the total outstanding shares of common stock.

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 8. Financial Statements and Supplementary Data