NHC Reports Second Quarter 2020 Earnings

National HealthCare Corporation (NYSE American: NHC), the nation's oldest publicly traded senior health care company, announced today net operating revenues and grant income for the quarter ended June 30, 2020 totaled $261,642,000 compared to $247,151,000 for the quarter ended June 30, 2019, an increase of 5.9%. Excluding the grant income recorded during the second quarter of 2020, net operating revenues would have decreased 4.1% compared to the second quarter of 2019.

For the quarter ended June 30, 2020, the reported GAAP net income attributable to NHC was $28,324,000 compared to $13,711,000 for the second quarter of 2019. Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended June 30, 2020 was $14,177,000 compared to $12,895,000 for the second quarter of 2019 ^(*). For the quarter ended June 30, 2020, the reported GAAP diluted earnings per share was $1.84 and the adjusted diluted earnings per share was $0.92 ^(*).

(*) - See the tables below that provide a reconciliation of GAAP to non-GAAP items.

About NHC

NHC affiliates operate for themselves and third parties 76 skilled nursing facilities with 9,633 beds. NHC affiliates also operate 24 assisted living communities, five independent living communities, one behavioral health hospital and 35 homecare programs. NHC’s other services include Alzheimer’s and memory care units, hospice services, pharmacy services, a rehabilitation services company, and providing management and accounting services to third party post-acute operators. Other information about the company can be found on our web site at www.nhccare.com.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company’s operations and measure the Company’s performance more consistently across periods. Therefore, the Company believes this information is meaningful in addition to the information contained in the GAAP presentation of financial information. 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.

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements. NHC cautions investors that any forward-looking statements made involve risks and uncertainties and are not guarantees of future performance. The risks and uncertainties are detailed from time to time in reports filed by NHC with the S.E.C., including Forms 8-K, 10-Q and 10-K, and include, among others, the following: liabilities and other claims asserted against us and patient care liabilities, as well as the resolution of current litigation; availability of insurance and assets for indemnification; national and local economic conditions; including their effect on the availability and cost of labor, utilities and materials; the effect of government regulations and changes in regulations governing the healthcare industry, including our compliance with such regulations; changes in Medicare and Medicaid payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries; and other factors referenced or incorporated by reference in the S.E.C. filings. The risks included here are not exhaustive. All forward-looking statements represent NHC’s best judgment as of the date of this release.

Consolidated Statements of Income
(in thousands, except share and per share amounts)
				Three Months Ended								Six Months Ended
				June 30								June 30
					2020				2019				2020				2019
				(unaudited)								(unaudited)
Revenues and grant income:
	Net patient revenues			$	225,671			$	235,264			$	469,766			$	471,375
	Other revenues				11,323				11,887				23,352				24,061
	Government stimulus income				24,648				-				24,648				-
		Net operating revenues and grant income			261,642				247,151				517,766				495,436
Costs and expenses:
	Salaries, wages and benefits				156,914				147,878				304,383				289,266
	Other operating				70,861				67,598				142,529				137,030
	Facility rent				10,320				10,197				20,652				20,435
	Depreciation and amortization				10,545				10,335				20,983				20,852
	Interest				453				954				865				1,880
		Total costs and expenses			249,093				236,962				489,412				469,463
Income from operations					12,549				10,189				28,354				25,973
Non-operating income					5,954				8,272				14,100				14,273
Unrealized gains/(losses) on marketable equity securities					20,053				(54	)			(40,339	)			6,784
Income before income taxes					38,556				18,407				2,115				47,030
Income tax provision					(10,034	)			(4,725	)			(409	)			(12,117	)
Net income					28,522				13,682				1,706				34,913
Net (income)/loss attributable to noncontrolling interest					(198	)			29				(234	)			67
Net income attributable to National HealthCare Corporation				$	28,324			$	13,711			$	1,472			$	34,980
Net income per common share
	Basic			$	1.85			$	0.90			$	0.10			$	2.29
	Diluted			$	1.84			$	0.89			$	0.10			$	2.28
Weighted average common shares outstanding
	Basic				15,307,105				15,269,637				15,300,941				15,262,950
	Diluted				15,372,430				15,352,702				15,367,464				15,338,520
Dividends declared per common share				$	0.52			$	0.52			$	1.04			$	1.02
	Balance Sheet Data			June 30				Dec. 31
	(in thousands)				2020				2019
				(unaudited)
	Cash, cash equivalents and marketable equity securities			$	261,585			$	202,787
	Restricted cash, cash equivalents and marketable debt securities				170,896				158,082
	Current assets				390,204				341,053
	Property and equipment, net				535,964				535,430
	Total assets				1,335,238				1,286,648
	Current liabilities				262,142				194,763
	NHC stockholders' equity				768,052				778,593

Selected Operating Statistics
	Three Months Ended								Six Months Ended
	June 30								June 30
		2020				2019				2020				2019
	(unaudited)
Skilled Nursing Per Diems:
Medicare	$	513.22			$	457.03			$	509.35			$	459.30
Managed Care		401.39				389.81				402.15				392.65
Medicaid		209.60				196.57				205.28				196.23
Private Pay and Other		247.48				245.53				249.60				245.65
Average Skilled Nursing Per Diem	$	277.85			$	269.44			$	278.48			$	270.91
Skilled Nursing Patient Days:
Medicare		90,896				109,140				196,439				221,994
Managed Care		50,669				62,866				112,225				125,293
Medicaid		333,196				326,234				677,722				644,520
Private Pay and Other		161,877				178,453				333,184				353,809
Total Skilled Nursing Patient Days		636,638				676,693				1,319,570				1,345,616
The tables below provide reconciliations of GAAP to non-GAAP items (in thousands, except per share amounts):
	Three Months Ended								Six Months Ended
	June 30								June 30
		2020				2019				2020				2019
	(unaudited)
Net income attributable to National Healthcare Corporation	$	28,324			$	13,711			$	1,472			$	34,980
Non-GAAP adjustments
Unrealized (gains)/losses on marketable equity securities		(20,053	)			54				40,339				(6,784	)
Operating results for newly opened facilities not at full capacity (1)		112				137				314				731
Gain on acquisition of equity method investment		-				(1,975	)			(1,708	)			(1,975	)
Stock-based compensation expense		823				684				1,289				1,108
Income tax (benefit)/provision on non-GAAP adjustments		4,971				284				(10,461	)			1,785
Non-GAAP Net income	$	14,177			$	12,895			$	31,245			$	29,845
GAAP diluted earnings per share	$	1.84			$	0.89			$	0.10			$	2.28
Non-GAAP adjustments
Unrealized (gains)/losses on marketable equity securities		(0.97	)			-				1.94				(0.34	)
Operating results for newly opened facilities not at full capacity (1)		0.01				0.01				0.02				0.04
Gain on acquisition of equity method investment		-				(0.09	)			(0.08	)			(0.09	)
Stock-based compensation expense		0.04				0.03				0.05				0.05
Non-GAAP diluted earnings per share	$	0.92			$	0.84			$	2.03			$	1.94
(1) The newly opened facilities not at full capacity for the 2020 period presented consist of facilities opened from 2018 through 2020 (one memory care facility). The newly opened facilities for the 2019 period presented consist of facilities opened from 2017 through 2019 (one skilled nursing facility, two assisted living facilities, and one memory care facility).

 

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