What changed in this filing

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Item 1. Financial Statements

2026-08-06 compared with 2026-05-07 · 242 added, 125 removed, 693 unchanged (35% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Net patient revenues

19 unchanged sentences

Non–operating income

4,172 5,132 7,929 9,211

Interest expense

( 13 ) ( 1,993 ) ( 282 ) ( 4,099 )

Unrealized gains on marketable equity securities

Unrealized gains/(losses) on marketable equity securities

915 ( 5,061 ) 9,989 5,921

Income before income taxes

18 unchanged sentences

Three Months Ended

$ 36,103 $ 32,290

Six Months Ended

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

1 unchanged sentence

Other comprehensive income/(loss), net of tax

( 919 ) 1,390

Net income attributable to noncontrolling interest

( 246 ) ( 85 )

Comprehensive income attributable to National HealthCare Corporation

$ 34,938 $ 33,595

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

4 unchanged sentences

Cash and cash equivalents

$ 85,526 $ 92,829

Restricted cash and cash equivalents, current portion

19,605 18,118

Marketable equity securities

172,826 162,972

Restricted marketable equity securities

16,624 17,197

Restricted marketable debt securities, current portion

16,991 18,062

Accounts receivable

137,742 139,002

Prepaid expenses and other assets

Total current assets

465,576 461,820

Property and Equipment:

Property and equipment, at cost

1,318,245 1,308,891

Accumulated depreciation and amortization

( 646,422 ) ( 635,094 )

Net property and equipment

671,823 673,797

Other Assets:

1 unchanged sentence

Restricted marketable debt securities, less current portion

105,841 105,231

Deposits and other assets

Operating lease right-of-use assets

39,787 47,778

170,478 170,478

Intangible assets

19,864 19,864

Investments in unconsolidated companies

41,982 38,733

Total other assets

386,695 390,802

$ 1,524,094 $ 1,526,419

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

17 unchanged sentences

Dividends payable

Long-term debt due within one year

Long-term debt, current portion

Total current liabilities

31 unchanged sentences

(unaudited – in thousands)

Three Months Ended

Six Months Ended

Cash Flows From Operating Activities:

$ 36,103 $ 32,290

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

Depreciation and amortization

11,614 10,978

Equity in losses of unconsolidated investments

Equity in losses/(earnings) of unconsolidated investments

Distributions from unconsolidated investments

Unrealized gains on marketable equity securities

( 9,074 ) ( 10,982 )

Gains on sale of marketable securities

( 173 ) ( 241 )

Realized gains on sale of marketable securities

Gain on sale of property and equipment

Deferred income taxes

2 unchanged sentences

Accounts receivable

1,260 ( 6,416 )

( 1,355 ) 960

Prepaid expenses and other assets

( 1,335 ) 445

Operating lease obligations

Trade accounts payable

( 1,396 ) ( 3,847 )

Accrued payroll

Amounts due to third party payors

323 ( 1,454 )

Accrued risk reserves

2 unchanged sentences

Net cash provided by operating activities

62,533 39,255

Cash Flows From Investing Activities:

Purchases of property and equipment

( 9,640 ) ( 6,137 )

Investments in unconsolidated companies

( 3,594 ) ( 2,419 )

Acquisition of skilled nursing facilities and other assets

Deposits in escrow for real estate acquisition

Collections of notes receivable

Investments in unconsolidated companies

Purchases of marketable securities

( 10,938 ) ( 11,062 )

Proceeds from sale of marketable securities

10,284 12,288

Net cash used in investing activities

( 13,888 ) ( 7,323 )

Cash Flows From Financing Activities:

Repayments under credit facility

( 40,000 ) ( 3,000 )

Dividends paid to common stockholders

( 9,941 ) ( 9,420 )

Issuance of common stock

Issuance of common shares

Repurchase of common shares

( 16,321 ) ( 1,722 )

Noncontrolling interest distributions

Entrance fee deposits (refunds)

Entrance fee deposits

Net cash used in financing activities

( 54,504 ) ( 12,693 )

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

( 5,859 ) 19,239

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

112,187 96,922

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

$ 106,328 $ 116,161

Balance Sheet Classifications:

Cash and cash equivalents

$ 85,526 $ 90,386

Restricted cash and cash equivalents

20,802 25,775

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

$ 106,328 $ 116,161

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

2 unchanged sentences

(in thousands, except share and per share amounts)

For the three months ended March 31, 2026 :

For the six months ended June 30, 2026 :

Comprehensive

17 unchanged sentences

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

For the three months ended March 31, 2025:

– – – 40,319 – 218 40,537

Distributions attributable to noncontrolling interest

– – – – – ( 129 ) ( 129 )

Other comprehensive loss

– – – – ( 409 ) – ( 409 )

Stock–based compensation

– – 1,986 – – – 1,986

Shares sold – options exercised

93,422 – 7,190 – – – 7,190

Repurchase of common shares

( 39,231 ) – ( 7,240 ) – – – ( 7,240 )

Dividends declared to common stockholders ($ 0.67 per share)

– – – ( 10,493 ) – – ( 10,493 )

Balance at June 30, 2026

15,661,395 $ 156 $ 235,575 $ 888,678 $ ( 2,107 ) $ 5,754 $ 1,128,056

For the six months ended June 30, 2025 :

Comprehensive

15 unchanged sentences

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

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

– – – 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

The 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

March 31, 2026

June 30, 2026

Note 1 – Description of Business

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

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.

As of June 30, 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.

During the second quarter of 2026, we recognized management fees of $ 18,325,000 previously earned for management services prior to 2025, but these management fees were not previously recognized as such revenues.

These revenues did not previously meet the recognition criteria of ASC Topic 606, Revenue from Contracts with Customers, because the underlying consideration was constrained.

Upon the acquisition of the five skilled nursing facilities from National Health Corporation on June 1, 2026, and as noted in Note 3 - Acquisition of Five Skilled Nursing Facilities, the revenue recognition criteria was met and the management fees were paid and recognized in the current period.

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 cost 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 costs of the corporate office.

See Note 7 for further disclosure of the Company’s operating segments.

3 unchanged sentences

The primary facility costs include utilities and property insurance.

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 .

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, which were $ 5,843,000 and $ 6,632,000 for the three months ended March 31, 2026 and 2025, respectively.

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 $ 8,740,000 and $ 17,780,000 for the three and six months ended June 30, 2026, respectively.

General and administrative costs were $ 8,822,000 and $ 17,345,000 for the three and six months ended June 30, 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, 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.

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

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 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.

As of June 30, 2026, the majority of our investments in unconsolidated companies relate to two multi-family developments 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 coverages include both primary policies and excess policies.

The coverage includes 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 may enter into continuing care contracts with us.

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

As of June 30, 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.

Recent Accounting Guidance Not Yet Adopted

Recently Adopted Accounting Guidance

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.

5 unchanged sentences

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

Note 3 – Acquisition of Five Skilled Nursing Facilities

On June 1, 2026, the Company purchased the land, buildings, and other specified assets and assumed certain liabilities of five skilled nursing facilities from National Health Corporation (“National”) for a purchase price of $ 50,500,000 .

National is considered an affiliate and related party and provides payroll services to NHC.

The operations have 639 licensed skilled nursing beds in the states of South Carolina and Tennessee.

The acquisition represents both an expansion of NHC’s operations into these states 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 preliminary purchase price allocation.

The Company has performed a preliminary valuation analysis of the fair market value of the assets acquired and liabilities assumed from National.

The final valuation of the assets acquired and liabilities assumed was not complete as of June 30, 2026, but will be finalized within the allowable measurement period.

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

Accounts receivable

Prepaid expenses and other assets

Property and equipment

Deposits and other assets

Intangible assets

Total assets acquired

Trade accounts payable

Accrued payroll

Other current liabilities

Total liabilities assumed

Total estimated fair value of the acquisition

The indefinite-lived intangible assets acquired include the skilled nursing certificates of need and licenses.

The operations added during the three and six months ended June 30, 2026 were not material to the Company.

Accordingly, pro-forma financial information is not presented.

As of June 30, 2026, these additions have been included in the interim condensed consolidated balance sheet of the Company.

The operating results have been included in the interim condensed consolidated statements of operations since the date the Company gained effective control, which was June 1, 2026.

For the three and six months ended June 30, 2026, these five skilled nursing facilities contributed net operating revenues of $ 6,002,000 and income before income taxes of $ 608,000 .

Note 4 – Net Patient Revenues

4 unchanged sentences

Three Months Ended

Six Months Ended

Net patient revenues:

1 unchanged sentence

$ 337,306 $ 325,012 $ 667,636 $ 650,490

Homecare and hospice services

Homecare and hospice

41,053 38,337 80,528 74,466

11 unchanged sentences

Three Months Ended

Six Months Ended

29 % 31 % 30 % 31 %

14 % 12 % 13 % 12 %

29 % 30 % 29 % 30 %

Private Pay and Other

28 % 27 % 28 % 27 %

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.

19 unchanged sentences

This revenue is recorded on an accrual basis based upon the date of services at amounts equal to its established or estimated per-visit rates.

State Relief Supplemental Funding

State Supplemental Funding

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.

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.

We recorded $ 1,821,000 and $ 1,812,000 in net patient revenues for these supplemental Medicaid payments for the three months ended June 30, 2026 and 2025, respectively.

We have recorded $ 3,605,000 and $ 3,684,000 in net patient revenues for these supplemental Medicaid payments for the six months ended June 30, 2026 and 2025, respectively.

Third Party Payors

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

Laws and regulations governing 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 $ 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.

We have made provisions of approximately $ 14,868,000 and $ 13,739,000 as of June 30, 2026 and December 31, 2025, respectively, for various Medicare, Medicaid, and Managed Care claims reviews and current and prior year cost reports.

Note 5 – Other Revenues

5 unchanged sentences

Three Months Ended

Six Months Ended

Rental income

1 unchanged sentence

Management and accounting services fees

22,204 4,085 26,514 8,508

Insurance services

688 831 1,475 1,645

384 473 802 875

Total other revenues

3 unchanged sentences

Additionally, we sublease four Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”) as noted in Note 8 – 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.

See Note 18 - Subsequent Events for further discussion regarding our lease with NHI.

Management Fees from National Health Corporation

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

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.

Before the acquisition of the five skilled nursing facilities from National on June 1, 2026, we managed the five skilled nursing facilities.

We recognized management fees and interest on management fees from these facilities of $ 944,000 and $ 1,376,000 for the three months ended June 30, 2026 and 2025, respectively.

We recognized management fees and interest on management fees of $ 2,351,000 and $ 2,784,000 from these facilities for the six months ended June 30, 2026 and 2025, respectively.

During the second quarter of 2026, we also recognized management fees of $ 18,325,000 previously earned for management services prior to 2025, but these management fees were not previously recognized as such revenues.

These revenues did not previously meet the recognition criteria of ASC Topic 606, Revenue from Contracts with Customers, because the underlying consideration was constrained.

Insurance Services

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.

For workers’ compensation insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended June 30, 2026 and 2025 were $ 485,000 and $ 541,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the six months ended June 30, 2026 and 2025 were $ 969,000 and $ 1,066,000 , 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 March 31, 2026 and 2025 were $ 304,000 and $ 289,000 , respectively.

For professional liability insurance services, the premium revenues reflected in the interim condensed consolidated statements of operations for the three months ended June 30, 2026 and 2025 were $ 203,000 and $ 289,000 , respectively.

The premium revenues reflected in the interim condensed consolidated statements of operations for the six months ended June 30, 2026 and 2025 were $ 506,000 and $ 579,000 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

Six Months Ended

Dividends and net realized gains and losses on sales of securities

1 unchanged sentence

Interest income

Equity in losses of unconsolidated investments

2,233 2,588 4,425 4,713

Equity in earnings/(loss) of unconsolidated investments

223 616 ( 123 ) 616

Total non-operating income

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

Three Months Ended March 31, 2026

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

Three Months Ended June 30, 2026

Net patient revenues

14 unchanged sentences

304,899 32,873 21,318 359,090

Income from operations

32,767 8,180 7,988 48,935

Non-operating income

- - 4,172 4,172

Interest expense

( 13 ) - - ( 13 )

Unrealized gains on marketable equity securities

Income before income taxes

$ 32,754 $ 8,180 $ 13,075 $ 54,009

Three Months Ended June 30, 2025

Net patient revenues

$ 325,012 $ 38,337 $ - $ 363,349

Other revenues

430 - 11,131 11,561

Net operating revenues

325,442 38,337 11,131 374,910

Costs and expenses:

Salaries, wages, and benefits

190,641 23,183 12,710 226,534

Other operating

83,450 7,046 1,447 91,943

8,828 581 1,919 11,328

Depreciation and amortization

10,099 131 785 11,015

Total costs and expenses

293,018 30,941 16,861 340,820

Income/(loss) from operations

4 unchanged sentences

( 1,993 ) - - ( 1,993 )

Unrealized losses on marketable equity securities

- - ( 5,061 ) ( 5,061 )

Income/(loss) before income taxes

$ 30,431 $ 7,396 $ ( 5,659 ) $ 32,168

Six Months Ended June 30, 2026

Net patient revenues

$ 667,636 $ 80,528 $ - $ 748,164

Other revenues

747 - 40,935 41,682

Net operating revenues

668,383 80,528 40,935 789,846

Costs and expenses:

Salaries, wages, and benefits

399,890 49,485 27,601 476,976

Other operating

163,982 13,785 7,945 185,712

18,020 1,251 3,912 23,183

Depreciation and amortization

20,676 261 1,850 22,787

Total costs and expenses

602,568 64,782 41,308 708,658

Income/(loss) from operations

65,815 15,746 ( 373 ) 81,188

Non-operating income

- - 7,929 7,929

Interest expense

( 282 ) - - ( 282 )

Unrealized gains on marketable equity securities

2 unchanged sentences

$ 65,533 $ 15,746 $ 17,545 $ 98,824

Three Months Ended March 31, 2025

Six Months Ended June 30, 2025

Net patient revenues

26 unchanged sentences

Operating Leases

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.

At June 30, 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.

3 unchanged sentences

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 $ 10,103,000 and $ 9,911,000 for the three months ended March 31, 2026 and 2025, respectively.

Total facility rent expense to NHI was $ 9,988,000 and $ 9,903,000 for the three months ended June 30, 2026 and 2025, respectively.

Total facility rent expense to NHI was $ 20,091,000 and $ 19,814,000 for the six months ended June 30, 2026 and 2025, respectively.

Minimum Lease Payments

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

The following table summarizes the maturity of our operating lease liabilities as of June 30, 2026 ( in thousands ):

Total minimum lease payments

8 unchanged sentences

Three Months Ended

Six Months Ended

Weighted average common shares outstanding

14 unchanged sentences

$ 2.54 $ 1.52 $ 4.82 $ 3.59

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.

For the three and six months ended June 30, 2026, no 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 six months ended June 30 2025, 269,351 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 10 – Investments in Marketable Securities

5 unchanged sentences

Marketable securities consist of the following (in thousands) :

March 31, 2026

June 30, 2026

December 31, 2025

15 unchanged sentences

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

March 31, 2026

June 30, 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) :

March 31, 2026

June 30, 2026

December 31, 2025

4 unchanged sentences

42,688 41,980 40,385 40,667

Over 10 years

$ 121,650 $ 119,367 $ 124,010 $ 123,293

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

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.

Gross unrealized gains related to marketable equity securities are $ 147,113,000 and $ 137,436,000 as of June 30, 2026 and December 31, 2025, respectively.

Gross unrealized losses related to marketable equity securities are $ 237,000 and $ 547,000 as of June 30, 2026 and December 31, 2025, respectively.

For the three months ended June 30, 2026 and 2025, the Company recognized net unrealized gains of $ 915,000 and net unrealized losses of $ 5,061,000 , respectively, for the changes in fair market value of the marketable equity securities in the interim condensed consolidated statements of operations.

For the six months ended June 30, 2026 and 2025, the Company recognized net unrealized gains of $ 9,989,000 and $ 5,921,000 , 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 $ 367,000 and $ 1,464,000 as of June 30, 2026 and December 31, 2025, respectively.

Gross unrealized losses related to available for sale marketable debt securities are $ 2,650,000 and $ 2,181,000 as of June 30, 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 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.

The Company has not recognized any credit related impairments for the six months ended June 30, 2026 and 2025.

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 six months ended June 30, 2026 and 2025 were $ 15,747,000 and $ 43,455,000 , respectively.

Investment gains of $ 153,000 and $ 480,000 were realized on these sales during the six months ended June 30, 2026 and 2025, respectively.

Note 11 – 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 March 31, 2026 and December 31, 2025 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

The following table summarizes fair value measurements by level at June 30, 2026 and December 31, 2025 for assets and liabilities measured at fair value on a recurring basis (in thousands) :

Fair Value Measurements Using

March 31, 2026

June 30, 2026

For Identical

35 unchanged sentences

Note 12 – Goodwill and Other Intangible Assets

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

At June 30, 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 March 31, 2026, the following table represents the activity related to our goodwill by segment ( in thousands ):

At June 30, 2026, the following table represents the activity related to our goodwill by segment ( in thousands ):

January 1, 2026

$ 5,924 $ 164,554 $ – $ 170,478

March 31, 2026

June 30, 2026

$ 5,924 $ 164,554 $ – $ 170,478

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Note 13 - Stock Repurchase Program

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 .

During the six months ended June 30, 2026, the Company repurchased 136,951 shares of its common stock for a total cost of $ 23,561,000 .

During the six months ended June 30, 2025, the Company repurchased 60,781 shares of its common stock for a total cost of $ 6,384,000 .

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 $ 1,280,000 and $ 1,027,000 for the three months ended March 31, 2026 and 2025, respectively.

Stock–based compensation totaled $ 1,986,000 and $ 1,233,000 for the three months ended June 30, 2026 and 2025, respectively.

Stock-based compensation totaled $ 3,266,000 and $ 2,260,000 for the six months ended June 30, 2026 and 2025, respectively.

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

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.

At June 30, 2026, the Company had $ 13,849,000 of unrecognized compensation cost related to unvested stock–based compensation awards.

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

Stock Options

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.

The following table summarizes the significant assumptions used to value the options granted for the six months ended June 30, 2026 and for the year ended December 31, 2025.

Risk–free interest rate

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Expected dividend yield

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

The following table summarizes our outstanding stock options for the six months ended June 30, 2026 and for the year ended December 31, 2025.

Exercise Price

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( 247,157 ) 78.20 –

Options outstanding at March 31, 2026

Options outstanding at June 30, 2026

717,622 $ 117.91 $ 67,063,000

Options exercisable at March 31, 2026

Options exercisable at June 30, 2026

191,793 $ 78.19 $ 25,540,000

March 31, 2026

June 30, 2026

Exercise Prices

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Note 15 – Income Taxes

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.

The Company's income tax provision as a percentage of our income before income taxes was 24.9 % and 25.0 % for the three months ended June 30, 2026 and 2025, respectively.

The Company's income tax provision as a percentage of our income before income taxes was 22.4 % and 25.7 % for the six months ended June 30, 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.

For the six months ended June 30, 2026 and 2025, the accrual of state income tax 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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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 credit facility or the revolving line of credit at March 31, 2026.

There are no amounts outstanding on the Credit Facility or the revolving line of credit at June 30, 2026

Note 17 – Contingencies, Commitments and Other Matters

Accrued Risk Reserves

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.

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 $ 121,129,000 and $ 121,595,000 at June 30, 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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Note 18 – 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.

On July 1, 2026, the Company purchased the land, facilities, and improvements of thirty-two skilled nursing facilities and three independent living facilities, currently leased by us as tenant, from National Health Investors (“NHI”) for a purchase price of $ 560,000,000 .

On the closing date of the transaction, the lease agreement with NHI was terminated.

The Company currently operates and will continue to operate all of the 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.

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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.

For the six months ended June 30, 2026, the Company paid $ 20 million into an escrow account to be used against the purchase price at closing.

These funds are classified in the investing section of the Interim Condensed Consolidated Statements of Cash Flows.

At June 30, 2026, these fund are also classified in the Interim Condensed Consolidated Balance Sheet in the current asset section under "prepaid expenses and other assets".

New $ 550 Million Credit Agreement

On May 26, 2026, the Company entered into a credit agreement, consisting of a $ 475,000,000 senior unsecured term loan facility and a $ 75,000,000 senior unsecured revolving credit facility.

The credit agreement became effective on July 1, 2026, in conjunction with the transaction with NHI, at which point, the current credit agreement terminated.

The term loans and revolving loans will mature on the fifth anniversary of the date of initial funding to the Company under the credit agreement.

Borrowings under the credit agreement will bear interest, at NHC’s option, at a rate based on either Term SOFR or a base rate, in each case plus an applicable margin.

The applicable margin will vary based on the Company’s consolidated leverage ratio and, based on the applicable pricing grid, will range from 1.25 % to 1.75 % per annum for Term SOFR borrowings and 0.25 % to 0.75 % per annum for base rate borrowings.

The base rate is a variable daily interest rate set at the highest among:

( 1 ) the Federal Funds Rate plus 0.50 %, ( 2 ) Bank of America’s publicly announced prime rate, or ( 3 ) Term SOFR plus 1.00 %.

In all cases, the base rate has a floor of 1.00 %.

The applicable rate as of the Funding Date and until the first business day following delivery of the compliance certificate for the fiscal quarter ending December 31, 2026 will be Term SOFR + 1.50 % or base rate + 0.50 %.

NHC is also required to pay a commitment fee on the daily unused portion of the revolving credit facility, which ranges from 0.20 % to 0.30 % per annum based on the consolidated leverage ratio, payable quarterly in arrears.

The credit agreement contains customary representations and warranties, financial covenants, and other customary affirmative and negative covenants.

The credit agreement also contains customary events of default.

On the closing date of the NHI transaction, pursuant to the terms of the credit agreement, the Company drew down the entire $ 475,000,000 under the senior unsecured term loan facility and $ 55,000,000 under the senior unsecured revolving credit facility to pay a portion of the purchase price and other fees and expense related to the transaction.

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