What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 79 added, 176 removed, 181 unchanged (58% of the section changed)

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changes in Medicare and Medicaid payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries;

liabilities and other claims asserted against us, including patient care liabilities, as well as the resolution of current litigation (see Note 16 to Interim Condensed Consolidated Financial Statements included in this Form 10-Q);

the status of our lease with National Health Investors, Inc.

("NHI"), including allegations of non-monetary default by NHI and the expiration of the current term at December 31, 2026;

liabilities and other claims asserted against us, including patient care liabilities, as well as the resolution of current litigation (see Note 16:

Contingencies, Commitments and Other Matters);

the ability to attract and retain qualified personnel;

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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.

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A primary area of management focus continues to be the rates of occupancy within our skilled nursing facilities.

The overall census in owned and leased skilled nursing facilities for the three months ending September 30, 2025 was 90.0% compared to 88.3% for the same period a year ago.

For the nine months ended September 30, 2025, overall census in our owned and leased skilled nursing facilities was 89.6% compared to 88.6% for the same period a year ago.

The overall census in owned and leased skilled nursing facilities for the three months ending March 31, 2026 was 90.0% compared to 89.3% for the same period a year ago.

Due to America’s healthcare labor shortage, the challenge of maintaining desirable patient census levels has been amplified.

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The Company has always strived for patient-centered care and quality outcomes as precursors to outstanding financial performance.

The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of September 30, 2025:

The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of March 31, 2026:

Industry Ratings

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Development and Growth

We are undertaking to expand our senior care operations while protecting our existing operations and markets.

The following table lists our recent development activities.

Placed in Service

Morristown, TN

Lawrenceburg, TN

Wytheville, VA

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

("White Oak").

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

The White Oak operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina.

We are undertaking to expand our senior health care operations while protecting our existing operations and markets.

The following table lists our current construction and development activities.

Estimated Completion

Assisted Living Facility

New Operation

Tullahoma, TN

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.

We have two multi-family developments that are currently under construction, both of which we are noncontrolling owners.

These developments are located in Franklin, Tennessee and Hermitage, Tennessee with 332 units and 315 units, respectively.

Our capital contributions in these developments are included in the line item "Investments in unconsolidated companies" in our interim condensed consolidated balance sheets.

Accrued Risk Reserves

Our accrued professional liability and workers’ compensation reserves totaled $114,032,000 at September 30, 2025 and are a primary area of management focus.

Our accrued professional liability and workers’ compensation reserves totaled $126,500,000 at March 31, 2026 and are a primary area of management focus.

We have set aside restricted cash and cash equivalents and marketable securities to fund our estimated professional liability and workers’ compensation liabilities.

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

In July 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates and policy changes for skilled nursing facilities, which began on October 1, 2024.

The fiscal year 2025 rule equated to a net 4.2% increase in Medicare Part A payments to SNFs in fiscal year 2025 compared to 2024 levels.

The rule included a market basket increase of 3.0%, an increase of 1.7% to the market basket forecast error adjustment, and a negative 0.5% productivity adjustment.

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

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

The 2025 final rule also updated the SNF Quality Reporting Program ("QRP") to better account for adverse social conditions that negatively impact individuals’ health or healthcare.

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

For the first nine months of 2025, our average Medicare per diem rate for skilled nursing facilities increased 5.9% as compared to the same period in 2024.

In April 2026, CMS released its proposed rule outlining fiscal year 2027 Medicare payment rates and policy changes for skilled nursing facilities, which will begin on October 1, 2026.

The fiscal year 2027 proposal equates to a net 2.4% increase in Medicare Part A payments to SNFs in fiscal year 2027 compared to 2026 levels.

The rule includes a market basket increase of 3.2% minus a 0.8% productivity adjustment.

Additionally, CMS has signaled that it believes case-mix indexes have increased at a rate that exceeds what changes in patient health status alone would justify.

The agency is specifically pointing to significant increases in coded conditions since PDPM was implemented in 2019.

To restore budget neutrality, CMS is considering two approaches:

a blanket 4.3% reduction in case-mix indexes, or varying adjustment factors applied individually across the five PDPM components (OT, PT, SLP, non-therapy ancillary, and nursing).

Applied against the proposed 2.4% rate increase, a 3.6% system-wide reduction under this framework could represent a net negative reimbursement outcome.

For the first three months of 2026, our average Medicare per diem rate for skilled nursing facilities increased 3.0% as compared to the same period in 2025.

Medicaid – Skilled Nursing Facilities

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

For the first nine months of 2025, our average Medicaid per diem increased 3.6% compared to the same period in 2024.

For the first three months of 2026, our average Medicaid per diem increased 3.7% compared to the same period in 2025.

State Medicaid plans subject to budget constraints are of particular concern to us.

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

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

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

As required by the Bipartisan Budget Act of 2018, this rule proposes a permanent prospective adjustment to the CY2025 home health payment rate to account for the impact of implementing the Patient-Driven Groupings Model (“PDGM”).

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

In June 2025, CMS released its proposed rule outlining fiscal year 2026 Medicare payment rates.

CMS projects payments to home health agencies in fiscal year 2026 will decrease by 6.4% or $1.1 billion, relative to the prior year.

This update includes a 3.2% market basket update, reduced by a 0.8 percentage point cut for productivity.

The rule also includes several reductions that CMS proposes as necessary to achieve budget neutral implementation of PDGM, including a 4.1% permanent reduction to the standard payment rate to prevent future overpayments.

In addition to the proposed permanent adjustment, CMS also proposes to apply a 5.0% temporary adjustment on a prospective basis to account for retrospective PDGM overpayments.

CMS states they are not proposing a future reduction would be applied after fiscal year 2026, but they will continue to analyze claims data each year for further temporary adjustments.

CMS states the CMS also proposes a 0.5% reduction related to high-cost outlier payments.

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

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

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

Medicare – Hospice

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

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

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

CMS issued a rate increase of 2.9%, or $790 million, effective October 1, 2024.

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

The FY2025 hospice payment update also includes an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made annually.

The cap amount for FY2025 is $34,465.

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

Segment Reporting

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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

Three Months Ended March 31, 2026

Net patient revenues

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Income before income taxes

Three Months Ended September 30, 2024

Net patient revenues

Other revenues

Net operating revenues and grant income

Costs and expenses:

Salaries, wages, and benefits

Other operating

Depreciation and amortization

Total costs and expenses

Income/(loss) from operations

Non-operating income

Interest expense

Unrealized gains on marketable equity securities

Income before income taxes

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2025

Net patient revenues

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Income before income taxes

Nine Months Ended September 30, 2024

Net patient revenues

Other revenues

Government stimulus income

Net operating revenues and grant income

Costs and expenses:

Salaries, wages, and benefits

Other operating

Depreciation and amortization

Total costs and expenses

Income/(loss) from operations

Non-operating income

Interest expense

Unrealized gains on marketable equity securities

Income before income taxes

Results of Operations

The following table and discussion set forth items from the interim condensed consolidated statements of operations as a percentage of net operating revenues and grant income for the three and nine months ended September 30, 2025 and 2024.

The following table and discussion set forth items from the interim condensed consolidated statements of operations as a percentage of net operating revenues for the three months ended March 31, 2026 and 2025.

Percentage of Net Operating Revenues

Three Months Ended

Nine Months Ended

Net operating revenues and grant income

Net operating revenues

Costs and expenses:

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Income tax provision

Net (income)/loss attributable to noncontrolling interest

Net income attributable to noncontrolling interest

Net income attributable to stockholders of NHC

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

Results for the quarter ended September 30, 2025 compared to the third quarter of 2024 include a 12.5% increase in net operating revenues.

The net operating revenues increase was due to a 8.7% increase in same-facility net operating revenues, as well as the August 1, 2024 acquisition of White Oak.

For the quarter ended September 30, 2025, GAAP net income attributable to NHC was $39,239,000 compared to net income of $42,789,000 for the same period in 2024.

Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended September 30, 2025 was $24,744,000 compared to $19,910,000 for the same period in 2024, an increase of 24.3%.

The increase in non-GAAP earnings for the three months ended September 30, 2025 compared to the same period in 2024 was primarily due to the continued increase in skilled nursing census, skilled nursing per diem increases from some of our government payors, the continued reduction of agency staffing expense, and the White Oak operations being accretive to earnings.

Net operating revenues and grant income

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Results for the quarter ended March 31, 2026 compared to the first quarter of 2025 include a 2.2% increase in net operating revenues.

For the quarter ended March 31, 2026, GAAP net income attributable to NHC was $35,857,000 compared to net income of $32,205,000 for the same period in 2025.

Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended March 31, 2026 was $30,089,000 compared to $24,838,000 for the same period in 2025, an increase of 21.1%.

The increase in non-GAAP earnings for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to a slight operating margin increase, a reduction of interest expense, and a favorable income tax rate for the quarter.

Net operating revenues

Net patient revenues increased $8,198,000, or 2.3%, compared to the same period last year.

When comparing net patient revenues for the first quarter of 2026 to the prior year period, the percentage increase was impacted due to a one-time Missouri retroactive Medicaid rate increase of $5,015,000 recorded in the first quarter of 2025.

This retroactive Medicaid rate increase was for the service period of July 1, 2024 through December 31, 2024.

For the three months ended March 31, 2026 and 2025, respectively, $1,784,000 and $1,872,000 have been included in our net patient revenues for supplemental Medicaid payments from the state of Tennessee.

The total census at owned and leased skilled nursing facilities for the quarter averaged 90.0%, compared to an average of 89.3% for the same quarter a year ago.

Overall, the composite skilled nursing facility per diem was flat compared to the same quarter a year ago.

Our Medicare per diem rates increased 6.1% and managed care per diem rates decreased 7.1% compared to the same quarter a year ago.

The average managed care per diem is lower due to the delayed timing of incentive quality payments from our NHC Advantage managed care program.

Excluding the incentive quality payments from NHC Advantage, the average Medicare Advantage skilled nursing per diem increased 2.7% during the third quarter of 2025 compared to the same period a year ago.

Medicaid per diem rates decreased 1.9% and private pay per diem rates increased 3.5% compared to the same quarter a year ago.

For the three months ended September 30, 2025 and 2024, respectively, $1,838,000 and $5,267,000 have been included in our net patient revenues for supplemental Medicaid payments.

The White Oak operations attributed to an increase of $20,026,000 in net patient revenues for the quarter ended September 30, 2025 compared to the same period in 2024.

Other revenues increased $148,000, or 1.3%, compared to the same quarter last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.

Overall, the composite skilled nursing facility per diem increased 3.2% compared to the same quarter a year ago.

Our Medicare and Managed Care per diem rates both increased 3.0%, respectively, compared to the same quarter a year ago.

Medicaid and private pay per diem rates increased 3.7% and 3.8%, respectively, compared to the same quarter a year ago.

Other revenues decreased $74,000, or 0.6%, compared to the same quarter last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.

Total costs and expenses

Total costs and expenses for the three months ended September 30, 2025 compared to the same period of 2024 increased $34,874,000, or 11.0% to $352,283,000 from $317,409,000.

Total costs and expenses for the three months ended March 31, 2026 compared to the same period of 2025 increased $6,638,000, or 1.9% to $349,568,000 from $342,930,000.

Salaries, wages, and benefits increased $6,944,000, or 3.0%, to $235,074,000 from $228,130,000.

Salaries, wages, and benefits as a percentage of net operating revenues was 60.9% compared to 62.7% for the three months ended September 30, 2025 and 2024, respectively.

Salaries, wages, and benefits as a percentage of net operating revenues was 61.6% compared to 61.0% for the three months ended March 31, 2026 and 2025, respectively.

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

For the third quarter of 2025, our agency nurse staffing expense was $1,207,000 compared to $3,099,000 for the third quarter of 2024.

The White Oak operations attributed to an increase of $13,158,000 in salaries, wages, and benefits for the three months ended September 30, 2025 compared to the same period in the prior year.

Other operating expenses increased $14,095,000, or 17.1%, to $96,604,000 for the 2025 period compared to $82,509,000 for the 2024 period.

Other operating expenses as a percentage of net operating revenues was 25.2% and 24.3% for the three months ended September 30, 2025 and 2024, respectively.

The White Oak operations attributed to an increase of $5,357,000 in other operating expenses for the three months ended September 30, 2025 as compared to the same period in the prior year.

We also incurred unfavorable claims activity within our professional liability captive insurance company during the third quarter of 2025.

The unfavorable claims activity resulted in additional other operating expenses of $4,219,000 for the third quarter of 2025 compared to the same period in the prior year.

Non–operating income increased by $436,000 compared to the same period last year, as further detailed in Note 5 to our interim condensed consolidated financial statements.

The income tax provision for the three months ended September 30, 2025 is $13,400,000 (an effective income tax rate of 24.6%).

For the first quarter of 2026, our agency nurse staffing expense was $1,063,000 compared to $1,487,000 for the first quarter of 2025.

Other operating expenses decreased $1,220,000, or 1.3%, to $91,237,000 for the 2026 period compared to $92,457,000 for the 2025 period.

Other operating expenses as a percentage of net operating revenues was 23.9% and 24.7% for the three months ended March 31, 2026 and 2025, respectively.

Non–operating income decreased by $322,000 compared to the same period last year, as further detailed in Note 5 to our interim condensed consolidated financial statements.

The income tax provision for the three months ended March 31, 2026 is $8,712,000 (an effective income tax rate of 19.4%).

For the three months ended March 31, 2026, the excess tax over book deductions for stock compensation was the most significant item impacting the effective income tax rate.

Noncontrolling interest

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The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

Results for the nine months ended September 30, 2025 compared to the same period of 2024 include a 20.6% increase in net operating revenues and grant income.

The net operating revenues increase was due to a 9.2% increase in same-facility net operating revenues, as well as the August 1, 2024 acquisition of White Oak.

For the nine months ended September 30, 2025, GAAP net income attributable to NHC was $95,166,000 compared to net income of $95,846,000 for the same period in 2024.

Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the nine months ended September 30, 2025 was $75,293,000 compared to $50,909,000 for the same period in 2024, an increase of 47.9%.

The increase in non-GAAP earnings for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to the continued increase in skilled nursing census, skilled nursing per diem increases from some of our government payors, the continued reduction of agency staffing expense, and the White Oak operations being accretive to earnings.

Net operating revenues and grant income

Net patient revenues increased $201,530,000, or 22.5%, compared to the same period last year.

The total census at owned and leased skilled nursing facilities for the nine months ended September 30, 2025 averaged 89.6%, compared to an average of 88.6% for the same period a year ago.

Overall, the composite skilled nursing facility per diem increased 3.7% compared to the same period a year ago.

Our Medicare per diem rates increased 5.9% and managed care per diem rates increased 2.0% compared to the same period a year ago.

The average managed care per diem is lower due to the delayed timing of incentive quality payments from our NHC Advantage managed care program.

Excluding the incentive quality payments from NHC Advantage, the average Medicare Advantage skilled nursing per diem increased 5.3% for the nine months ending September 30, 2025 compared to the same period a year ago.

Medicaid and private pay per diem rates increased 3.6% and 7.2%, respectively, compared to the same period a year ago.

For the nine months ended September 30, 2025 and 2024, respectively, $5,522,000 and $11,314,000 have been included in our net patient revenues for supplemental Medicaid payments.

The White Oak operations attributed to an increase of $133,606,000 in net patient revenues for the nine months ended September 30, 2025 compared to the same period in 2024.

Other revenues increased $1,151,000, or 3.4%, compared to the same period last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.

Total costs and expenses

Total costs and expenses for the nine months ended September 30, 2025 compared to the same period of 2024 increased $158,985,000, or 18.1% to $1,036,033,000 from $877,048,000.

Salaries, wages, and benefits increased $111,231,000, or 19.3%, to $687,840,000 from $576,609,000.

Salaries, wages, and benefits as a percentage of net operating revenues was 60.8% compared to 61.5% for the nine months ended September 30, 2025 and 2024, respectively.

For the nine months ended September 30, 2025, our agency nurse staffing expense was $3,675,000 compared to $12,483,000 for the same period of 2024.

The White Oak operations attributed to an increase of $87,741,000 in salaries, wages, and benefits for the nine months ended September 30, 2025 compared to the same period in the prior year.

Other operating expenses increased $42,912,000, or 18.0%, to $281,004,000 for the 2025 period compared to $238,092,000 for the 2024 period.

Other operating expenses as a percentage of net operating revenues was 24.8% and 25.4% for the nine months ended September 30, 2025 and 2024, respectively.

The White Oak operations attributed to an increase of $30,941,000 in other operating expenses for the nine months ended September 30, 2025 as compared to the same period in the prior year.

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

The unfavorable claims activity resulted in additional other operating expenses of $6,685,000 for the nine months ending September 30, 2025 compared to the same period in the prior year.

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

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

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

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

Non–operating income decreased by $994,000 compared to the same period last year, as further detailed in Note 5 to our interim condensed consolidated financial statements.

In January 2024, the Company sold its 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

The income tax provision for the nine months ended September 30, 2025 is $32,887,000 (an effective income tax rate of 25.2%).

Non-GAAP Financial Presentation

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

Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, gains on sales of assets, and share-based compensation expense is helpful in allowing investors to assess the Company’s operations more accurately.

Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities and share-based compensation expense is helpful in allowing investors to assess the Company’s operations more accurately.

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

Three Months Ended

Nine Months Ended

Net income attributable to National Healthcare Corporation

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Unrealized gains on marketable equity securities

Operating results for newly opened facilities or agencies not at full capacity

Share-based compensation expense

Gain on sale of property and equipment

Gain on sale of unconsolidated company

Acquisition-related expenses

Employee retention credit

Income tax expense on non-GAAP adjustments

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Unrealized gains on marketable equity securities

Operating results for newly opened facilities or agencies not at full capacity

Share-based compensation expense

Gain on sale of property and equipment

Gain on sale of unconsolidated company

Acquisition-related expenses

Employee retention credit

Income tax expense on non-GAAP adjustments

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Our primary sources of cash include revenues from the operations of our healthcare and senior living facilities, management and accounting services, rental income, and investment income.

Our primary uses of cash include salaries, wages and other operating costs of our healthcare and senior living facilities, the cost of additions to and acquisitions of real property, facility rent expenses, long-term debt payments, and dividend distributions.

These sources and uses of cash are reflected in our interim condensed consolidated statements of cash flows and are discussed in further detail below.

The following is a summary of our sources and uses of cash flows (dollars in thousands) :

Nine Months Ended

Nine Month Change

Three Months Ended

Three Month Change

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

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Cash used in investing activities

Cash (used in)/provided by financing activities

Cash used in financing activities

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

Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2025 was $168,271,000 as compared to $94,514,000 in the same period last year.

Net cash provided by operating activities for the three months ended March 31, 2026 was $62,533,000 as compared to $39,255,000 in the same period last year.

Cash provided by operating activities consisted of net income of $36,103,000 and adjustments for non–cash items of $6,891,000.

There was cash provided by working capital in the amount of $62,731,000 for the nine months ended September 30, 2025 compared to $7,015,000 for the same period a year ago.

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

There was cash provided by working capital in the amount of $19,712,000 for the three months ended March 31, 2026 compared to $4,827,000 for the same period a year ago.

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

Investing Activities

Net cash used in investing activities totaled $20,924,000 for the nine months ended September 30, 2025, compared to $225,048,000 for the nine months ended September 30, 2024.

Cash used for property and equipment additions was $26,049,000 and $19,944,000 for the nine months ended September 30, 2025 and 2024, respectively.

In 2025, we contributed capital of $3,123,000 for two joint venture, multi-family developments that are under construction in Nashville, Tennessee compared to $8,370,000 for the same period in the prior year.

Proceeds from the sale of marketable securities, net of purchases, resulted in cash provided by investing activities of $7,736,000 for the nine months ended September 30, 2025 compared to $15,040,000 for the same period a year ago.

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

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

Net cash used in investing activities totaled $13,888,000 for the three months ended March 31, 2026, compared to $7,323,000 for the three months ended March 31, 2025.

Cash used for property and equipment additions was $9,640,000 and $6,137,000 for the three months ended March 31, 2026, and 2025, respectively.

For the three months ended March 31, 2026, we contributed capital of $3,594,000 for two joint venture, multi-family developments that are under construction in Nashville, Tennessee compared to $2,419,000 for the same period in the prior year.

Cash used for purchases of marketable securities, net of proceeds, resulted in cash used of $654,000 for the three months ended March 31, 2026.

Proceeds from the sale of marketable securities, net of purchases, resulted in cash provided by investing activities of $1,226,000 for the three months ended March 31, 2025.

Financing Activities

Net cash used in financing activities totaled $92,735,000 for the nine months ended September 30, 2025 compared to cash provided by financing activities in the amount of $119,640,000 for the nine months ended September 30, 2024.

During the first nine months of 2025, cash of $63,875,000 was used to pay down the outstanding principal balance of the long-term debt.

Cash used for dividend payments to common stockholders totaled $28,773,000 in the current year period compared to $27,545,000 for the same period a year ago.

Proceeds from the issuance of common stock totaled $9,415,000 and $13,471,000 for the nine months ended September 30, 2025 and 2024, respectively.

We repurchased common shares outstanding in the amount of $9,566,000 and $13,502,000 for the nine months ended September 30, 2025 and 2024, respectively.

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

Net cash used in financing activities totaled $54,504,000 for the three months ended March 31, 2026 compared to $12,693,000 for the three months ended March 31, 2025.

During the first quarter of 2026, cash of $40,000,000 was used to pay down the outstanding principal balance of the long-term debt compared to $3,000,000 for the same period in the prior year.

Cash used for dividend payments to common stockholders totaled $9,941,000 and $9,420,000 for the three months ended March 31, 2026 and 2025, respectively.

Proceeds from the issuance of common stock totaled $12,268,000 and $1,278,000 for the three months ended March 31, 2026 and 2025, respectively.

We repurchased common shares outstanding in the amount of $16,321,000 and $1,722,000 for the three months ended March 31, 2026 and 2025, respectively.

The repurchased common shares were all from employee stock option exercises and were not from repurchases on the open market.

Short – term liquidity

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Long – term liquidity

We expect to meet our long-term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $130,629,000, our unrestricted marketable equity securities of $166,754,000, and our borrowing capacity on the $50 million available line of credit.

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

We expect to meet our long-term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $85,526,000, our unrestricted marketable equity securities of $172,826,000, and the borrowing capacity on our unencumbered real estate.

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

2 unchanged sentences

Governmental Regulations

Laws and regulations governing Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation.

Laws and regulations governing the Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation.

Management believes that it is following all applicable laws and regulations in all material respects.

1 unchanged sentence

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 2. Management’s Discussion and Analysis