NHC Reports 2018 Year End Earnings

National HealthCare Corporation (NYSE American: NHC), the nation’s oldest publicly traded senior health care company, announced today net operating revenues for the year ended December 31, 2018 totaled $980,349,000 compared to $963,895,000 for the year ended December 31, 2017, an increase of 1.7%. For the year ended December 31, 2018, reported GAAP net income attributable to NHC was $58,964,000 compared to $56,205,000 for the 2017 year, an increase of 4.9%. Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the year ended December 31, 2018 was $64,372,000 compared to $54,179,000 for the 2017 year, an increase of 18.8%(1).

GAAP diluted earnings per share were $3.87 and $3.69 for the years ended December 31, 2018 and 2017, respectively, an increase of 4.9%. Adjusted diluted earnings per share were $4.22 and $3.56 for the years ended December 31, 2018 and 2017, respectively, an increase of 18.5%(1).

Net operating revenues for the three months ended December 31, 2018 totaled $248,920,000 compared to $245,466,000 for the same three months in 2017, an increase of 1.4%. The fourth quarter of 2018 net income attributable to NHC was $18,152,000, or $1.19 per diluted share. In the fourth quarter of 2017, net income attributable to NHC was $21,470,000, or $1.41 per diluted share, which included a favorable $8.5 million adjustment due to the U.S. Tax Cuts and Jobs Act legislation that was passed in December 2017.

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

About NHC

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NHC affiliates operate for themselves and third parties 75 skilled nursing facilities with 9,510 beds. NHC affiliates also operate 24 assisted living communities, five independent living communities, one behavioral health hospital, and 35 homecare programs. NHCs other services include Alzheimers 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 Companys operations and measure the Companys 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 NHCs best judgment as of the date of this release.

 
 
 
 
 
Consolidated Statements of Income
(in thousands, except share and per share amounts)
 
            Three Months Ended     Year Ended
December 31 December 31
2018     2017 2018     2017
(as adjusted) (as adjusted)
Revenues: (unaudited)
Net patient revenues $ 235,601 $ 233,144 $ 932,774 $ 916,742
Other revenues   13,319     12,322   47,575     47,153  
Net operating revenues   248,920     245,466   980,349     963,895  
 
Costs and expenses:
Salaries, wages and benefits 147,972 145,404 582,721 572,043
Other operating 61,770 61,311 254,038 249,833
Facility rent 10,232 10,094 40,923 40,367
Depreciation and amortization 10,718 11,043 41,894 42,652
Interest   1,034     1,291   4,697     4,890  
Total costs and expenses   231,726     229,143   924,273     909,785  
 
Income before non-operating income 17,194 16,323 56,076 54,110
Non-operating income 6,614 4,392 17,670 20,439
Unrealized gains on marketable securities   721       1,138      
 
Income before income taxes 24,529 20,715 74,884 74,549
Income tax (provision)/benefit   (6,393 )   581   (16,185 )   (18,867 )
Net income 18,136 21,296 58,699 55,682
 
Loss attributable to noncontrolling interest   16     174   265     523  
 
Net income attributable to National HealthCare Corporation $ 18,152   $ 21,470 $ 58,964   $ 56,205  
 
Earnings per common share
Basic $ 1.19 $ 1.41 $ 3.87 $ 3.70
Diluted $ 1.19 $ 1.41 $ 3.87 $ 3.69
 
Weighted average common shares outstanding
Basic 15,235,772 15,200,619 15,224,886 15,189,920
Diluted 15,255,107 15,222,343 15,236,826 15,218,962
 
Dividends declared per common share $ 0.50 $ 0.48 $ 1.98 $ 1.89
 
 
Balance Sheet Data
(in thousands) Dec. 31 Dec. 31
2018 2017
 
Cash, cash equivalents and marketable securities $ 183,470 $ 198,203
Restricted cash, cash equivalents and marketable securities 184,266 174,698
Current assets 322,009 329,311
Property and equipment, net 534,650 549,319
Total assets 1,080,948 1,096,526
Current liabilities 157,924 155,065
Long-term debt 55,000 100,000
NHC stockholders’ equity 733,278 702,738
 
 
 
 
 
 
Selected Operating Statistics
       
Three Months Ended Year Ended
December 31 December 31
2018 2017 2018 2017
(unaudited)
Skilled Nursing Per Diems:
Medicare $ 463.12 $ 459.14 $ 462.24 $ 460.82
Managed Care 389.51 400.91 397.75 405.67
Medicaid 197.89 187.07 191.88 186.53
Private Pay and Other   237.70     231.17     238.53     231.61  
 
Average Skilled Nursing Per Diem $ 269.35   $ 265.30   $ 269.69   $ 266.45  
 
Skilled Nursing Patient Days:
Medicare 114,541 121,295 476,694 481,580
Managed Care 58,002 58,421 240,796 244,908
Medicaid 327,075 321,653 1,288,265 1,281,432
Private Pay and Other   182,872     183,633     718,121     725,460  
 
Total Skilled Nursing Patient Days   682,490     685,002     2,723,876     2,733,380  
 
 
 
The tables below provide reconciliations of GAAP to non-GAAP items (in thousands, except per share amounts):
 
Three Months Ended Year Ended
December 31 December 31
2018 2017 2018 2017
(unaudited)
 
Net income attributable to National Healthcare Corporation $ 18,152 $ 21,470 $ 58,964 $ 56,205
Non-GAAP adjustments:
Unrealized gains on marketable equity securities (721 ) (1,138 )
Legal costs and charges related to Caris’ legal investigation 1,650 8,364 2,889
Operating results for newly opened facilities not at full capacity (*) 1,604 1,335 3,562 7,332
Gain on acquisition of equity method investment (2,050 )
Gain on sale of assets/healthcare facilities (1,669 ) (1,669 ) (1,305 )
Stock-based compensation expense 240 415 1,778 1,678
Tax adjustments from the U.S. Tax Cuts and Jobs Act (8,488 ) (1,434 ) (8,488 )
Provision of income taxes on non-GAAP adjustments   142     (1,326 )   (2,005 )   (4,132 )
Non-GAAP Net income $ 17,748   $ 15,056   $ 64,372   $ 54,179  
 
 
GAAP diluted earnings per share $ 1.19 $ 1.41 $ 3.87 $ 3.69
Non-GAAP adjustments:
Unrealized gains on marketable equity securities (0.03 ) (0.06 )
Legal costs and charges related to Caris’ legal investigation 0.07 0.46 0.12
Operating results for newly opened facilities not at full capacity (*) 0.08 0.05 0.17 0.29
Gain on acquisition of equity method investment (0.13 )
Gain on sale of assets/healthcare facilities (0.09 ) (0.08 ) (0.05 )
Stock-based compensation expense 0.01 0.02 0.08 0.07
Tax adjustments from the U.S. Tax Cuts and Jobs Act       (0.56 )   (0.09 )   (0.56 )
Non-GAAP diluted earnings per share $ 1.16   $ 0.99   $ 4.22   $ 3.56  
 
 
(*) The newly opened facilities for the 2018 periods presented consist of facilities opened from 2016 through 2018 (two skilled nursing facilities, three assisted living facilities, and one memory care facility). The newly opened facilities for the 2017 periods presented consist of facilities opened from 2015 through 2017 (three skilled nursing facilities and four assisted living facilities).
 
 
 
 

Brian F. Kidd, SVP and Controller
(615) 890-2020