What changed in this filing

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Item 1. Financial Statements

2026-05-07 compared with 2025-11-06 · 96 added, 314 removed, 722 unchanged (36% of the section changed)

4 unchanged sentences

Three Months Ended

Nine Months Ended

Net patient revenues

2 unchanged sentences

12,016 12,090

Government stimulus income

Net operating revenues and grant income

Net operating revenues

381,821 373,697

14 unchanged sentences

Non–operating income

4,660 4,224 13,871 14,865

Interest expense

1 unchanged sentence

Unrealized gains on marketable equity securities

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

Income before income taxes

3 unchanged sentences

36,103 32,290

Net (income)/loss attributable to noncontrolling interest

Net income attributable to noncontrolling interest

( 246 ) ( 85 )

7 unchanged sentences

15,770,507 15,575,752

Dividends declared per common share

$ 0.64 $ 0.61 $ 1.89 $ 1.81

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

3 unchanged sentences

Three Months Ended

Nine Months Ended

$ 36,103 $ 32,290

Other comprehensive income:

Unrealized gains on investments in marketable debt securities

Other comprehensive income/(loss):

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

( 1,092 ) 1,594

Reclassification adjustment for realized losses on sales of marketable debt securities

11 - 663 1,388

Income tax expense related to items of other comprehensive income

( 124 ) ( 460 ) ( 619 ) ( 711 )

Other comprehensive income, net of tax

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

Other comprehensive income/(loss), net of tax

( 919 ) 1,390

Net (income)/loss attributable to noncontrolling interest

Net income attributable to noncontrolling interest

( 246 ) ( 85 )

5 unchanged sentences

(in thousands)

September 30,

Current Assets:

40 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Liabilities and Stockholders ’ Equity

13 unchanged sentences

Dividends payable

Long-term debt, current portion

Long-term debt due within one year

Total current liabilities

1 unchanged sentence

Long-term debt

65,625 129,500

Operating lease liabilities, less current portion

28 unchanged sentences

(unaudited – in thousands)

Nine Months Ended

Three Months Ended

Cash Flows From Operating Activities:

3 unchanged sentences

11,614 10,978

Equity in earnings of unconsolidated investments

( 512 ) ( 589 )

Distributions from unconsolidated investments

Equity in losses of unconsolidated investments

Unrealized gains on marketable equity securities

( 9,074 ) ( 10,982 )

Realized gains on sale of marketable securities

Gains on sale of marketable securities

( 173 ) ( 241 )

Gain on sale of unconsolidated company

Gain on sale of property and equipment

Deferred income taxes

3 unchanged sentences

1,260 ( 6,416 )

( 1,355 ) 960

Prepaid expenses and other assets

( 1,335 ) 445

Operating lease obligations

3 unchanged sentences

Amounts due to third party payors

323 ( 1,454 )

Accrued risk reserves

Other current liabilities

30,250 12,434

Other noncurrent liabilities

832 ( 8,031 )

Net cash provided by operating activities

3 unchanged sentences

( 9,640 ) ( 6,137 )

Acquisition of White Oak Senior Living, net of cash acquired

- ( 215,896 )

Acquisition of other businesses, net of cash acquired

Proceeds from the sale of unconsolidated company

Collections of (investments in) notes receivable

Investments in unconsolidated companies

( 3,594 ) ( 2,419 )

Collections of notes receivable

Purchases of marketable securities

5 unchanged sentences

Cash Flows From Financing Activities:

Borrowings under credit facility

Repayments under credit facility

( 40,000 ) ( 3,000 )

Principal payments under finance lease obligations

Dividends paid to common stockholders

( 9,941 ) ( 9,420 )

Noncontrolling interest contributions

Issuance of common shares

Issuance of common stock

Repurchase of common shares

( 16,321 ) ( 1,722 )

Noncontrolling interest distributions

Entrance fee deposits (refunds)

Net cash (used in)/provided by financing activities

Net cash used in financing activities

( 54,504 ) ( 12,693 )

16 unchanged sentences

(in thousands, except share and per share amounts)

For the nine months ended September 30, 2025 :

For the three months ended March 31, 2026 :

Comprehensive

3 unchanged sentences

– – – 35,857 – 246 36,103

Other comprehensive income

– – – – 1,390 – 1,390

Stock–based compensation

– – 1,027 – – – 1,027

Shares sold – options exercised

32,262 – 1,278 – – – 1,278

Repurchase of common shares

( 17,409 ) – ( 1,722 ) – – – ( 1,722 )

Dividends declared to common stockholders ($ 0.61 per share)

– – – ( 9,444 ) – – ( 9,444 )

Balance at March 31, 2025

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

– – – 23,722 – 391 24,113

Other comprehensive income

– – – – 1,442 – 1,442

Stock–based compensation

– – 1,233 – – – 1,233

Shares sold – options exercised

77,689 – 5,184 – – – 5,184

Repurchase of common shares

( 43,372 ) – ( 4,662 ) – – – ( 4,662 )

Dividends declared to common stockholders ($ 0.64 per share)

– – – ( 9,909 ) – – ( 9,909 )

Balance at June 30, 2025

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

Distributions attributable to noncontrolling interest

– – – – – ( 324 ) ( 324 )

Other comprehensive income

Other comprehensive loss

– – – – ( 919 ) – ( 919 )

7 unchanged sentences

– – – ( 9,989 ) – – ( 9,989 )

Balance at September 30, 2025

Balance at March 31, 2026

15,607,204 $ 156 $ 233,639 $ 858,852 $ ( 1,698 ) $ 5,665 $ 1,096,614

For the nine months ended September 30, 2024 :

For the three months ended March 31, 2025:

Comprehensive

3 unchanged sentences

– – – 32,205 – 85 32,290

Other comprehensive loss

– – – – ( 437 ) – ( 437 )

Stock–based compensation

– – 793 – – – 793

Shares sold – options exercised

150,194 1 8,412 – – – 8,413

Repurchase of common shares

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

Dividends declared to common stockholders ($ 0.59 per share)

– – – ( 9,086 ) – – ( 9,086 )

Balance at March 31, 2024

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

– – – 26,844 – 262 27,106

Other comprehensive income

8 unchanged sentences

– – – ( 9,444 ) – – ( 9,444 )

Balance at June 30, 2024

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

Net income/(loss)

– – – 42,789 – ( 89 ) 42,700

Contributions attributable to noncontrolling interest

Other comprehensive income

– – – – 3,056 – 3,056

Stock–based compensation

– – 1,093 – – – 1,093

Shares sold – options exercised

34,417 2,232 – – – 2,232

Repurchase of common shares

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

Dividends declared to common stockholders ($ 0.61 per share)

– – – ( 9,419 ) – – ( 9,419 )

Balance at September 30, 2024

Balance at March 31, 2025

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

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

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

NATIONAL HEALTHCARE CORPORATION

Notes to Interim Condensed Consolidated Financial Statements

September 30, 2025

March 31, 2026

Note 1 – Description of Business

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

As of September 30, 2025, we operate or manage, through certain affiliates, 80 skilled nursing facilities with a total of 10,329 licensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies.

As of March 31, 2026, we operate or manage, through certain affiliates, 80 skilled nursing facilities with a total of 10,323 licensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies.

We operate specialized care units within certain of our healthcare centers such as Alzheimer's disease care units and sub-acute nursing units.

44 unchanged sentences

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

Government Grants

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

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

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

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

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

Segment Reporting

2 unchanged sentences

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

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

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

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

3 unchanged sentences

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 in the interim condensed consolidated statements of operations as a reduction of "other operating expenses."

General and Administrative Costs

With the Company being a healthcare provider, the majority of our expenses are "cost of revenue" items.

Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation and incentive compensation, which were $ 6,250,000 and $ 19,909,000 for the three and nine months ended September 30, 2025, respectively.

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

Costs that could be classified as "general and administrative" by the Company would include its corporate office costs, excluding stock-based compensation, which were $ 5,843,000 and $ 6,632,000 for the three months ended March 31, 2026 and 2025, respectively.

Long-Term Leases

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

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

10 unchanged sentences

Property and Equipment

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

Property and equipment are recorded at cost.

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

4 unchanged sentences

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

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

As of March 31, 2026, the majority of our investments in unconsolidated companies relate to two multi-family developments that are under construction in Franklin, Tennessee and Hermitage, Tennessee.

Business Combinations

24 unchanged sentences

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

The coverage includes both primary policies and excess policies.

The coverages include both primary policies and excess policies.

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

1 unchanged sentence

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

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

Residents may enter into continuing care contracts with us.

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

3 unchanged sentences

If the present value of the cost of future services exceeds the related anticipated revenues, a liability is recorded with a corresponding charge to income.

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

As of March 31, 2026, and December 31, 2025, we have recorded a future service obligation liability in the amount of $ 1,482,000 .

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

7 unchanged sentences

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

Recently Adopted Accounting Guidance

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

Improvements to Income Tax Disclosures," which requires companies to 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.

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

Recent Accounting Guidance Not Yet Adopted

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

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023 - 06, " Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative ," which amends U.S.

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

4 unchanged sentences

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

Reclassifications

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

Note 3 – Net Patient Revenues

4 unchanged sentences

Three Months Ended

Nine Months Ended

Net patient revenues:

1 unchanged sentence

$ 330,330 $ 325,478

Homecare and hospice

Homecare and hospice services

39,475 36,129

11 unchanged sentences

Three Months Ended

Nine Months Ended

31 % 30 % 31 % 32 %

12 % 9 % 12 % 10 %

29 % 33 % 30 % 30 %

Private Pay and Other

28 % 28 % 27 % 28 %

100 % 100 % 100 % 100 %

Medicare covers skilled nursing services for beneficiaries who require nursing care and/or rehabilitation services following a hospitalization of at least three consecutive days.

22 unchanged sentences

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

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

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

We have recorded $ 1,784,000 and $ 1,872,000 in net patient revenues for these supplemental Medicaid payments for the three months ended March 31, 2026 and 2025, respectively.

Third Party Payors

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

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

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

5 unchanged sentences

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

We have made provisions of approximately $ 15,060,000 and $ 15,351,000 as of September 30, 2025 and December 31, 2024, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

We have made provisions of approximately $ 14,062,000 and $ 13,739,000 as of March 31, 2026 and December 31, 2025, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

Note 4 – Other Revenues

5 unchanged sentences

Three Months Ended

Nine Months Ended

Rental income

1 unchanged sentence

Management and accounting services fees

4,115 4,226 12,623 12,744

Insurance services

966 818 2,611 2,506

414 452 1,289 907

Total other revenues

7 unchanged sentences

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

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

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

For the three months ended March 31, 2026 and 2025, we recognized management fees and interest on management fees of $ 1,407,000 and $ 1,408,000 , respectively, for these centers.

Insurance Services

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

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

For workers’ compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 were $ 484,000 and $ 525,000 , respectively.

Associated losses and expenses including those for self-insurance are included in the interim condensed consolidated statements of operations as "Salaries, wages and benefits."

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

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

For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended March 31, 2026 and 2025 were $ 304,000 and $ 289,000 , respectively.

Associated losses and expenses including those for self–insurance are included in the interim condensed consolidated statements of operations as "Other operating costs and expenses".

2 unchanged sentences

Three Months Ended

Nine Months Ended

Dividends and net realized gains and losses on sales of securities

1 unchanged sentence

Interest income

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

Equity in earnings/(loss) of unconsolidated investments

(105 ) ( 62 ) 512 589

Gain on sale of unconsolidated company

Equity in losses of unconsolidated investments

Total non-operating income

$ 3,757 $ 4,079

Gain on sale of unconsolidated company

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

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

Note 6 – Business Segments

6 unchanged sentences

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

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

Three Months Ended September 30, 2025

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

Three Months Ended March 31, 2026

Net patient revenues

24 unchanged sentences

$ 32,778 $ 7,565 $ 4,472 $ 44,815

Three Months Ended September 30, 2024

Net patient revenues

$ 293,026 $ 35,648 $ - $ 328,674

Other revenues

370 - 11,154 11,524

Net operating revenues and grant income

293,396 35,648 11,154 340,198

Costs and expenses:

Salaries, wages, and benefits

175,241 21,456 16,698 213,395

Other operating

72,384 6,612 3,513 82,509

8,422 602 1,862 10,886

Depreciation and amortization

9,632 172 815 10,619

Total costs and expenses

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

Income/(loss) from operations

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

Non-operating income

- - 4,224 4,224

Interest expense

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

Unrealized gains on marketable equity securities

- - 32,767 32,767

Income before income taxes

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

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2025

Net patient revenues

24 unchanged sentences

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

Nine Months Ended September 30, 2024

Net patient revenues

$ 790,664 $ 103,751 $ - $ 894,415

Other revenues

710 - 33,462 34,172

Government stimulus income

- - 9,445 9,445

Net operating revenues and grant income

791,374 103,751 42,907 938,032

Costs and expenses:

Salaries, wages, and benefits

474,190 63,761 38,658 576,609

Other operating

207,883 18,977 11,232 238,092

24,795 1,736 5,273 31,804

Depreciation and amortization

27,646 545 2,352 30,543

Total costs and expenses

734,514 85,019 57,515 877,048

Income/(loss) from operations

56,860 18,732 ( 14,608 ) 60,984

Non-operating income

- - 14,865 14,865

Interest expense

( 1,788 ) - - ( 1,788 )

Unrealized gains on marketable equity securities

- - 56,290 56,290

Income before income taxes

$ 55,072 $ 18,732 $ 56,547 $ 130,351

Note 7 – Long-Term Leases

Operating Leases

At September 30, 2025, we lease from NHI the real property of 32 skilled nursing facilities and three independent living centers under one lease agreement.

At March 31, 2026, we lease from NHI the real property of 32 skilled nursing facilities and three independent living centers under one lease agreement.

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

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

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

See Note 17 – Subsequent Event for further discussion of the lease and our purchase of the NHI real estate.

The lease includes base rent plus a percentage rent.

The annual base rent is $ 31,975,000 in 2026.

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

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

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

Total facility rent expense to NHI was $ 10,103,000 and $ 9,911,000 for the three months ended March 31, 2026 and 2025, respectively.

Minimum Lease Payments

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

The following table summarizes the maturity of our operating lease liabilities as of March 31, 2026 ( in thousands ):

Total minimum lease payments

8 unchanged sentences

Three Months Ended

Nine Months Ended

Weighted average common shares outstanding

14 unchanged sentences

$ 2.27 $ 2.07

For the three and nine months ended September 30, 2025, 6,450 stock options were excluded from the calculation of diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive impact.

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

For the three months ended March 31, 2026 and 2025, 250,250 and 493,249 stock options, respectively, were excluded from the calculation of diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive impact.

Note 9 – Investments in Marketable Securities

3 unchanged sentences

Realized gains and losses from securities sales are recognized in results of operations upon disposition of the securities using the specific identification method on a trade date basis.

Refer to Note 10 for a description of the Company's methodology for determining the fair value of marketable securities.

Refer to Note 10 – Fair Value Measurements for a description of the Company's methodology for determining the fair value of marketable securities.

Marketable securities consist of the following (in thousands) :

September 30, 2025

March 31, 2026

December 31, 2025

15 unchanged sentences

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

September 30, 2025

March 31, 2026

December 31, 2025

2 unchanged sentences

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

September 30, 2025

March 31, 2026

December 31, 2025

7 unchanged sentences

$ 124,630 $ 122,832 $ 124,010 $ 123,293

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

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

For the three months ended September 30, 2025 and 2024, the Company recognized net unrealized gains of $ 20,827,000 and $ 32,767,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

For the nine months ended September 30, 2025 and 2024, the Company recognized net unrealized gains of $ 26,748,000 and $ 56,290,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

Gross unrealized gains related to available for sale marketable debt securities are $ 1,445,000 and $ 135,000 as of September 30, 2025 and December 31, 2024, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 2,554,000 and $ 5,449,000 as of September 30, 2025 and December 31, 2024, respectively.

Gross unrealized gains related to marketable equity securities are $ 146,697,000 and $ 137,436,000 as of March 31, 2026 and December 31, 2025, respectively.

Gross unrealized losses related to marketable equity securities are $ 734,000 and $ 547,000 as of March 31, 2026 and December 31, 2025, respectively.

For the three months ended March 31, 2026 and 2025, the Company recognized net unrealized gains of $ 9,074,000 and $ 10,982,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

Gross unrealized gains related to available for sale marketable debt securities are $ 691,000 and $ 1,464,000 as of March 31, 2026 and December 31, 2025, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 2,489,000 and $ 2,181,000 as of March 31, 2026 and December 31, 2025, respectively.

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

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

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

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

Investment gains of $ 872,000 and $ 331,000 were realized on these sales during the nine months ended September 30, 2025 and 2024, respectively.

The Company has not recognized any credit related impairments for the three months ended March 31, 2026 and 2025.

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

Proceeds from the sale of available for sale marketable securities during the three months ended March 31, 2026 and 2025 were $ 10,284,000 and $ 12,288,000 , respectively.

Investment gains of $ 173,000 and $ 241,000 were realized on these sales during the three months ended March 31, 2026 and 2025, respectively.

Note 10 – Fair Value Measurements

8 unchanged sentences

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

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

The following table summarizes fair value measurements by level at March 31, 2026 and December 31, 2025 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

September 30, 2025

March 31, 2026

For Identical

35 unchanged sentences

Note 11 – Goodwill and Other Intangible Assets

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

At March 31, 2026, we evaluated potential triggering events that might be indicators that our goodwill and indefinite lived intangibles were impaired.

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

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

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

At March 31, 2026, the following table represents the activity related to our goodwill by segment ( in thousands ):

January 1, 2026

$ 5,924 $ 164,554 $ – $ 170,478

September 30, 2025

March 31, 2026

$ 5,924 $ 164,554 $ – $ 170,478

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

September 30,

December 31, 2024

$ 15,896 $ 15,896

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Note 12 - Stock Repurchase Program

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

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

During the three months ended March 31, 2026, the Company repurchased 97,720 shares of its common stock for a total cost of $ 16,321,000 .

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

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

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

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

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

Stock–based compensation totaled $ 1,280,000 and $ 1,027,000 for the three months ended March 31, 2026 and 2025, respectively.

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

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

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

At March 31, 2026, the Company had $ 13,723,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

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

Stock Options

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

September 30,

The following table summarizes the significant assumptions used to value the options granted for the three months ended March 31, 2026 and for the year ended December 31, 2025.

Risk–free interest rate

4.13 % 4.40 %

Expected volatility

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Expected dividend yield

2.80 % 2.63 %

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

The following table summarizes our outstanding stock options for the three months ended March 31, 2026 and for the year ended December 31, 2025.

Exercise Price

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( 155,218 ) 79.05 –

Options cancelled

( 6,333 ) 78.77 –

Options outstanding at September 30, 2025

Options outstanding at March 31, 2026

748,916 $ 108.56 $ 38,299,147

Options exercisable at September 30, 2025

Options exercisable at March 31, 2026

246,232 $ 75.15 $ 20,817,766

September 30, 2025

March 31, 2026

Exercise Prices

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Note 14 – Income Taxes

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

The Company's income tax provision as a percentage of our income before income taxes was 25.2 % and 26.3 % for the nine months ended September 30, 2025 and 2024, respectively.

The Company's income tax provision as a percentage of our income before income taxes was 19.4 % and 26.1 % for the three months ended March 31, 2026 and 2025, respectively.

Typically, these percentages vary from the U.S.

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

For the three months ended March 31, 2026 and 2025, the excess tax over book deductions for stock compensation was the most significant reconciling item.

Our quarterly income tax provision, and our estimate of our annual effective income tax rate, is subject to variation due to several factors, including volatility based on the amount of pre-tax income or loss.

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

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

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

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

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

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

Note 15 – Long-Term Debt

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

Interest rate at

September 30,

Credit facility, interest payable monthly

5.7 % 2029 $ 73,125 $ 137,000

Less current portion

( 7,500 ) ( 7,500 )

Total long-term debt

$ 65,625 $ 129,500

Total long-term debt, less current portion

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

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

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

NHC’s obligations under the Credit Facility are unsecured.

The Credit Facility contains customary representations and warranties, financial covenants, and other customary affirmative and negative covenants.

The Credit Facility also contains customary events of default.

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

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

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

Long–Term Debt

There are no amounts outstanding on the credit facility or the revolving line of credit at March 31, 2026.

Note 16 – Contingencies, Commitments and Other Matters

National Health Investors, Inc.

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

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

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

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

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

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

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

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

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

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

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

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

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

Accrued Risk Reserves

We have wholly–owned limited purpose insurance companies that insure risks related to workers’ compensation and general and professional liability insurance claims both for our owned and leased entities and certain of the entities to which we provide management or accounting services.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 114,032,000 and $ 103,616,000 at September 30, 2025 and December 31, 2024, respectively.

We have wholly-owned limited purpose insurance companies that insure risks related to workers’ compensation and professional liability insurance claims both for our owned and leased entities and certain of the entities to which we provide management or accounting services.

The liability we have recognized for reported claims and estimates for incurred but unreported claims totals $ 126,500,000 and $ 121,595,000 at March 31, 2026 and December 31, 2025, respectively.

The liability is included in accrued risk reserves in the interim condensed consolidated balance sheets and is subject to adjustment for actual claims incurred.

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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.

Civil Investigative Demand / Qui Tam Complaint

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

(“Caris”) received a Civil Investigative Demand (“CID”) from the U.S.

Attorney’s Office for the Eastern District of Tennessee.

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.

Governmental Regulations

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

Note 17 – Subsequent Events

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

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

Note 17 – Subsequent Event

On April 21, 2026, NHC entered into a Purchase and Sale Agreement to acquire the real estate of thirty-two skilled nursing facilities and three independent living facilities from NHI for the purchase price of $ 560 million.

NHC currently operates and will continue to operate all of these facilities, except four Florida skilled nursing facilities.

The four Florida skilled nursing facilities will continue to be subject to a third -party operator’s lease after the closing of the transaction.

The facilities subject to the agreement are located in Alabama, Florida, Kentucky, Missouri, South Carolina, Tennessee, and Virginia.

NHC operates multiple skilled nursing facilities, assisted living and independent living communities, as well as homecare and hospice operations within this geographic footprint.

The acquisition will complement NHC’s current asset portfolio within these regions.

The transaction is expected to close in the third quarter of 2026, subject to customary closing conditions, including, but not limited to, the expiration or termination of the applicable waiting period and any extensions thereof under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

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

What changed 10-Q

Item 1. Financial Statements