What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-03-03 · 46 added, 80 removed, 133 unchanged (49% of the section changed)

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Annual Report on Form 10-K are “forward-looking statements”

within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

the “Company,”

“we,”

“our,”

“us”

or similar terms), “believes,”

“expects,”

“may,”

“could,”

“anticipates,”

“estimates,”

“plans,”

“intends,”

or the use of words such as “would,”

“will,”

“may,”

“could,”

“goal,”

“focus,”

or “should,”

or other words of similar import.

Certain matters discussed in this Annual Report on Form 10-K are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), “believes,” “expects,” “may,” “could,” “anticipates,” “estimates,” “plans,” “intends,” or the use of words such as “would,” “will,” “may,” “could,” “goal,” “focus,” or “should,” or other words of similar import.

Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements.

In this Annual Report on Form 10-K, statements regarding the value and utility of, and market demand for, our service offerings, future opportunities for growth with respect to new and existing clients, our future ability to compete and the types of firms with which we will compete, future consolidation in the healthcare industry, future adequacy of our liquidity sources, future revenue sources, future revenue growth, future revenue estimates used to calculate recurring contract value, the expected impact of economic factors, including inflation, future capital expenditures including, without limitation, our headquarters renovation costs, and the timing, amount, and sources of cash to fund such capital expenditures, future stock repurchases and dividends, the expected impact of pending claims and contingencies, the future outcome of uncertain tax positions, our future use of owned and leased real property, the expected impact of the conflict in Ukraine, and the expected impact of the COVID-19 pandemic, among others, are forward-looking statements.

In this Annual Report on Form 10-K, statements regarding the value and utility of, and market demand for, our service offerings, future opportunities for growth with respect to new and existing clients, our future ability to compete and the types of firms with which we will compete, future consolidation in the healthcare industry, future adequacy of our liquidity sources, future revenue sources, future revenue growth, future revenue estimates used to calculate recurring contract value, the expected impact of economic factors, including interest rates and inflation, future capital expenditures including, without limitation, our headquarters renovation costs, and the timing, amount, and sources of cash to fund such capital expenditures, future stock repurchases and dividends, the expected impact of pending claims and contingencies, the future outcome of uncertain tax positions, our future use of owned and leased real property, and the expected impact of global conflicts, among others, are forward-looking statements.

Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated.

Factors that could affect actual results or outcomes include, without limitation, the following factors:

The possibility of non-renewal of our client service contracts, reductions in services purchased or prices, and failure to retain key clients;

The possibility of non-renewal of our client service contracts, reductions in services purchased or prices, and failure to retain key clients;

Our ability to compete in our markets, which are highly competitive with new market entrants, and the possibility of increased price pressure and expenses;

The likelihood that the COVID-19 or other pandemic will adversely affect our operations, sales, earnings, financial condition and liquidity;

The likelihood that the ongoing Russian-Ukraine conflict will adversely affect our operations, sales, earnings, financial condition and liquidity;

The likelihood that a pandemic will adversely affect our operations, sales, earnings, financial condition and liquidity;

The likelihood that global conflicts will adversely affect our operations, sales, earnings, financial condition and liquidity;

The effects of an economic downturn;

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The possibility that our intellectual property and other proprietary information technology could be copied or independently developed by our competitors;

Our ability to maintain effective internal controls;

The possibility for failures or deficiencies in our information technology platform;

The possibility that we or our third-party providers could be subject to cyber-attacks, security breaches or computer viruses;

The factors set forth under the caption “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

The factors set forth under the caption “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

Shareholders, potential investors and other readers are urged to consider these and other factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

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For more than 40 years, NRC Health has led the charge to humanize healthcare and support organizations in their understanding of each unique individual.

NRC Health’s commitment to Human Understanding®

helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship.

Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market research, and emphasis on consumer preferences are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems.

Our end-to-end solutions enable our clients to understand what matters most to each person they serve –

before, during, after, and beyond clinical encounters –

to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships.

Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market.

NRC Health’s commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship.

Our end-to-end solutions enable our clients to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships.

We believe access to, and analysis of, our extensive consumer-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships and build loyalty.

Our expertise includes the efficient capture, transmittal, analysis, and interpretation of critical data elements from millions of healthcare consumers.

Using our solutions, our partners gain insights into what people think and feel about their organizations in real-time, allowing them to build on their strengths and implement service recovery with greater speed and personalization.

We also provide legacy experience-based solutions and shared intelligence from industry thought leaders and the nation’s largest member network focused on healthcare governance and strategy to member boards and executives.

Using our solutions, our partners gain insights into what people think and how they feel about their organizations in real-time, allowing them to build on their strengths and implement service recovery with greater speed and personalization.

We also provide legacy experience-based solutions and shared intelligence from industry thought leaders and the nation’s largest member network focused on healthcare governance and strategy to member boards and executives.

Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty.

We partner with clients across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model. 

We have a broad and diversified client base that is distributed primarily across the United States.

Our ten largest clients collectively accounted for 15%, 15%, and 14% of our total revenue in 2023, 2022 and 2021, respectively.

Approximately 1%, 2% and 2% of our revenue was derived from foreign customers in 2022, 2021, and 2020, respectively.

We have achieved a market leadership position through our more than 40 years of industry innovation and experience, as well as our long-term, recurring revenue relationships (solutions that are used or required by a client each year) with many of the healthcare industry’s largest organizations.

Since our founding in 1981, we have focused on meeting the evolving information needs of the healthcare industry through internal product development, as well as select acquisitions.

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NRC Health recognizes that behind every person is a story.

We help our partners get to know each person they serve - their behaviors, preferences, wants, and needs—not as point-in-time insights, but as an ongoing relationship.

With the complexity and demands associated with healthcare delivery today, seeing the whole picture is now more important than ever.

The end-to-end Human Understanding solutions are designed to help capture and act on what matters most to patients and their families.

The end-to-end Human Understanding solutions are designed to help capture and act on what matters most to patients and their families, frontline employees, and the broader community hospitals and health systems serve.

The Human Understanding solutions deliver the capabilities needed to turn strategic aspiration into action in critical focus areas.

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The primary solution categories include Marketing, Reputation, and Experience.

Marketing Solutions –

Our Marketing solutions are subscription-based services that allow for improved tracking of awareness, perception, and consistency of healthcare brands;

Marketing Solutions – Our Marketing solutions are subscription-based services that allow for improved tracking of awareness, perception, and consistency of healthcare brands;

real-time assessment of competitive differentiators;

and enhanced segmentation tools to evaluate the needs, wants, and behaviors of communities through real-time competitive assessments and enhanced segmentation tools.

and enhanced segmentation tools to evaluate the needs, wants, and behaviors of communities through real-time competitive assessments and enhanced segmentation tools.

Market Insights is the largest U.S.

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Our Marketing solutions provide clients with on-demand tools to measure brand value and build brand equity in their markets, evaluate and optimize advertising efficacy and consumer recall, and tailor research to obtain the real time voice of customer feedback to support branding and loyalty initiatives.

Experience Solutions –

Our Experience solutions are provided on a subscription basis via a cross-continuum multi-mode digital platform that collects and measures data and then delivers business intelligence that our clients utilize to improve patient experience, engagement and loyalty.

Patient experience data can also be collected on a periodic basis using Consumer Assessment of Healthcare Providers and Systems (“CAHPS”) compliant mail and telephone survey methods for regulatory compliance purposes and to monitor and measure improvement in CAHPS survey scores.

Experience Solutions – Our Experience solutions are provided on a subscription basis via a cross-continuum multi-mode digital platform that collects and measures data and then delivers business intelligence that our clients utilize to improve patient experience, engagement, and loyalty.

CAHPS survey data can be collected and measured as an integrated service within our digital platform or independently as a legacy service offering.

Our Experience solutions provide healthcare systems with the ability to receive and act on customer and employee feedback across all care settings in real-time.

Experience solutions include patient experience, workforce engagement, health risk assessments, care transition, and improvement tools.

Experience solutions include patient experience, employee engagement, health risk assessments, care transition, and improvement tools.

These solutions enable clients to comply with regulatory requirements and to improve their reimbursement under value-based purchasing models.

More importantly, our Experience solutions provide quantitative and qualitative real-time feedback, improvement plans, and coaching insights.   By illuminating the complete care journey in real time, our clients can ensure each individual receives the care, respect, and experience they deserve.

More importantly, our Experience solutions provide quantitative and qualitative real-time feedback, improvement plans, and coaching insights.

By illuminating the complete care journey in real time, our clients can ensure each individual receives the care, respect, and experience they deserve.

Developing a longitudinal profile of what healthcare customers want and need allows for organizational improvement and increased customer loyalty.

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Tracking, trending, and benchmarking tools isolate the key areas for process improvement allowing organizations to implement changes and reduce future readmissions.

Reputation Solutions –

Our Reputation solutions allow healthcare organizations to share a picture of their organization and ensure that timely and relevant content informs better consumer decision-making.

Reputation Solutions – Our Reputation solutions allow healthcare organizations to share a picture of their organization and ensure that timely and relevant content informs better consumer decision-making.

Our star ratings tools enable our partners to publish a five-star rating metric and verified patient feedback derived from actual patient survey data to complement their online physician information.

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The Governance Institute

Our Governance solutions, branded as The Governance Institute (“TGI”), serves not-for-profit health system boards of directors, executives, and physician leadership.

TGI’s subscription-based, value-driven membership services are provided through national conferences, publications, advisory services, and an online portal designed to improve the effectiveness of hospital and healthcare systems by continually strengthening their board governance, strategic planning, medical leadership, management performance and customer loyalty.

Our Governance solutions, branded as The Governance Institute (“TGI”), serves not-for-profit health system boards of directors, executives, and physician leadership.

TGI also conducts research studies and tracks industry trends showcasing emerging healthcare trends and best practice solutions of healthcare system boards across the country.

TGI thought leadership helps our client board members and executives inform and guide their organization’s strategic priorities in alignment with the rapidly changing healthcare market.

For additional information on our operating segment and our revenue and assets by geographic area, see Note 13, “Segment Information,”

to our consolidated financial statements.

TGI thought leadership helps our client board members and executives inform and guide their organization’s strategic priorities in alignment with the rapidly changing healthcare market.

For additional information on our operating segment and our revenue and assets by geographic area, see Note 13, “Segment Information,” to our consolidated financial statements.

Growth Strategy

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We believe that there is an opportunity to add new clients across all solutions.

Our sales organization is actively identifying and engaging new client prospects with a focus on demonstrating the economic value derived from adopting the portfolio of solutions in alignment with the prospect’s strategic objectives.

Adding new solutions.

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The evolving market creates an opportunity for us to introduce new solutions that leverage and extend our existing core competencies.

We believe that there is an opportunity to drive sales growth with both existing and new clients, across all of the market segments that we serve, through the introduction of new solutions.

We believe that there is an opportunity to drive sales growth with both existing and new clients, across all the market segments that we serve, through the introduction of new solutions.

Pursue strategic acquisitions and investments.

We have historically complemented our organic growth with strategic acquisitions, having completed eight such transactions over the past nineteen years.

We have historically complemented our organic growth with strategic acquisitions, having completed eight such transactions since 2001.

These transactions have added new capabilities and access to market segments that are adjacent and complementary to our existing solutions and market segments.

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The healthcare information and market research services industry is highly competitive.

We have traditionally competed with healthcare organizations’

internal marketing, market research, and/or quality improvement departments which create their own performance measurement tools, and with relatively small specialty research firms which provide survey-based healthcare market research and/or performance assessment.

We have traditionally competed with healthcare organizations’ internal marketing, market research, and/or quality improvement departments which create their own performance measurement tools, and with relatively small specialty research firms which provide survey-based healthcare market research and/or performance assessment.

Our primary competitors among such specialty firms include Press Ganey, which we believe has significantly higher annual revenue than us, and several other organizations that we believe have less annual revenue than us.

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Our history is based on capturing the voice of the consumer in healthcare markets.

Our solutions build on the “Eight Dimensions of Patient-Centered Care,”

a philosophy developed by noted patient advocate Harvey Picker, who believed patients’

experiences are integral to quality healthcare.

Our solutions build on the “Eight Dimensions of Patient-Centered Care,” a philosophy developed by noted patient advocate Harvey Picker, who believed patients’ experiences are integral to quality healthcare.

This foundation has been enhanced through our digital platform offering that provides the delivery of data and insights on a real time basis to understand what matters most to each individual.

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Our end-to-end solutions enable our clients to understand what matters most to each person they serve –

before, during, after, and beyond clinical encounters –

to gain a longitudinal understanding of each individual.

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(now known as the Gallup Organization).

Our Chief Financial Officer, Kevin Karas, CPA, has extensive financial experience having served as CFO at two previous companies, along with healthcare experience at Rehab Designs of America, Inc.

and NovaCare, Inc.

Jona Raasch has served as our Chief Operating Officer for most of the last 31 years and as Chief Executive Officer of the Governance Institute for more than 15 years. 

Helen Hrdy was appointed as our Chief Growth Officer in 2020. 

Helen Hrdy was appointed as our Chief Customer Officer in January 2024.

Prior to this position Ms.

Hrdy served as our Senior Vice President, Customer Success, for eight years.

Hrdy served as our Chief Growth Officer for three years and our Senior Vice President, Customer Success, for eight years.

In January 2024, Jason Hahn, Christophe Louvion, and Andy Monnich joined our management team as Chief Revenue Officer, Chief Product Technology Officer and Chief Corporate Development Officer, respectively.

They have track records of success in similar positions at leading healthcare information and technology companies such as Press Ganey, Perceptyx, Episource, PatientPop, and Practicing Excellence.

Our success depends in part upon our data collection processes, research methods, data analysis techniques and internal systems, and procedures that we have developed specifically to serve clients in the healthcare industry.

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Government Regulation

According to the Centers for Medicare and Medicaid Services (“CMS”), health expenditures in the United States were approximately $4.3 trillion in 2021, or $12,914 per person.

In total, health spending accounted for 18.3% of the nation’s Gross Domestic Product in 2021.

According to the Centers for Medicare and Medicaid Services (“CMS”), health expenditures in the United States were approximately $4.5 trillion in 2022, or $13,493 per person.

In total, health spending accounted for 17% of the nation’s Gross Domestic Product in 2022.

Addressing this growing expenditure burden continues to be a major policy priority at both federal and state levels.

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With the aging of the U.S.

population, Medicare enrollment has increased significantly. 

In addition, longer life spans and greater prevalence of chronic illnesses among both the Medicare and Medicaid populations have placed tremendous demands on the health care system.

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At the same time, organizations that have successfully developed effective customer service models and brand loyalty in other industry verticals are entering the healthcare services market.

We believe that our current portfolio of solutions is uniquely aligned to address these healthcare market trends and related business opportunity.

We believe that our current portfolio of solutions is uniquely aligned to address these healthcare market trends and related business opportunities.

We provide tools and solutions to capture, interpret and improve the CAHPS data required by CMS as well as real time feedback that enables clients to better understand what matters most to people at key moments in their relationship with a health organization.

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None of our associates are represented by a collective bargaining unit.

The majority of our associates work remotely.

We attract a passionate team of associates who care deeply about making a difference in advancing “Human Understanding”

in healthcare.

Most of our associates work remotely.

We attract a passionate team of associates who care deeply about making a difference in advancing “Human Understanding” in healthcare.

We consider our relationships with our associates to be good.

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

What changed 10-K

Item 1. Business