NHC Reports Third Quarter 2018 Earnings

National HealthCare Corporation (NYSE American: NHC), the nation’s oldest publicly traded senior health care company, announced today net operating revenues for the quarter ended September 30, 2018 totaled $246,326,000 compared to $241,196,000 for the quarter ended September 30, 2017, an increase of 2.1%.

For the quarter ended September 30, 2018, reported GAAP net income attributable to NHC was $21,142,000 compared to $11,352,000 for the third quarter of 2017, an increase of 86.2%. Excluding the $3.5 million unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended September 30, 2018 was $15,710,000 compared to $11,875,000 for the third quarter of 2017, an increase of 32.3%(1). For the quarter ended September 30, 2018, the reported GAAP diluted earnings per share was $1.39 and the adjusted diluted earnings per share was $1.03(1).

       

(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 76 skilled nursing facilities with 9,604 beds. NHC affiliates also operate 24 assisted living communities, five independent living communities, one geriatric psychiatric 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 Nine Months Ended
September 30 September 30
2018 2017 2018 2017
(unaudited) (unaudited)
Revenues:
Net patient revenues $ 234,827 $ 229,259 $ 697,173 $ 683,598
Other revenues   11,499     11,937     34,256     34,831  
Net operating revenues 246,326 241,196 731,429 718,429
 
Costs and expenses:
Salaries, wages and benefits 149,188 145,900 434,749 426,639
Other operating 64,507 63,250 192,268 188,522
Facility rent 10,190 10,106 30,691 30,273
Depreciation and amortization 10,437 10,833 31,176 31,609
Interest   1,170     1,322     3,663     3,599  
Total costs and expenses   235,492     231,411     692,547     680,642  
 
Income from operations 10,834 9,785 38,882 37,787
 
Other income:
Non-operating income 8,467 6,090 11,056 16,047
Unrealized gains on marketable equity securities   3,486         417      
 
Income before income taxes 22,787 15,875 50,355 53,834
Income tax provision   (1,700 )   (4,691 )   (9,792 )   (19,448 )
Net income 21,087 11,184 40,563 34,386
 
Net loss attributable to noncontrolling interest   55     168     249     349  
 
Net income attributable to National HealthCare Corporation $ 21,142   $ 11,352   $ 40,812   $ 34,735  
 
Net income per common share
Basic $ 1.39 $ 0.75 $ 2.68 $ 2.29
Diluted $ 1.39 $ 0.75 $ 2.68 $ 2.28
 
Weighted average common shares outstanding
Basic 15,225,654 15,195,394 15,221,217 15,186,315
Diluted 15,242,086 15,220,567 15,230,692 15,217,797
 
Dividends declared per common share $ 0.50 $ 0.48 $ 1.48 $ 1.41
 
Balance Sheet Data
(in thousands) Sept. 30 Dec. 31
2018 2017
(unaudited)
 
Cash, cash equivalents and marketable securities $ 195,101 $ 198,203
Restricted cash, cash equivalents and marketable securities 180,168 174,698
Current assets 324,473 329,311
Property and equipment, net 540,936 549,319
Total assets 1,084,668 1,096,526
Current liabilities 151,548 155,065
Long-term debt 75,000 100,000
NHC stockholders’ equity 720,023 702,738
 
             
Selected Operating Statistics
 
Three Months Ended Nine Months Ended
September 30 September 30
2018 2017 2018 2017
(unaudited) (unaudited)
Skilled Nursing Per Diems:
Medicare $ 462.94 $ 459.63 $ 461.96 $ 461.38
Managed Care 400.61 402.86 400.36 407.16
Medicaid 191.61 188.48 189.84 186.35
Private Pay and Other   240.57     230.73     238.82     231.76  
 
Average Skilled Nursing Per Diem $ 268.89   $ 265.79   $ 269.81   $ 266.84  
 
Skilled Nursing Patient Days:
Medicare 115,420 117,634 362,153 360,285
Managed Care 63,047 64,327 182,794 186,487
Medicaid 330,761 325,886 961,190 959,779
Private Pay and Other   181,570     183,339     535,249     541,827  
 
Total Skilled Nursing Patient Days   690,798     691,186     2,041,386     2,048,378  
 
 
 
The tables below provide reconciliations of GAAP to non-GAAP items (in thousands, except per share amounts):
 
Three Months Ended Nine Months Ended
September 30 September 30
2018 2017 2018 2017
(unaudited) (unaudited)
 
Net income attributable to National Healthcare Corporation $ 21,142 $ 11,352 $ 40,812 $ 34,735
Non-GAAP adjustments:
Unrealized gains on marketable equity securities (3,486 ) (417 )
Legal costs and charges related to Caris’ legal investigation 757 8,364 1,239
Operating results for newly opened facilities not at full capacity (*) 492 976 947 2,725
Gain on acquisition of equity method investment (2,050 ) (2,050 )
Gain on sale of assets within equity method investment (1,305 ) (1,305 )
Stock-based compensation expense 361 430 1,538 1,263
Tax provision adjustment on 2017 filed income tax returns (1,434 ) (1,434 )
Provision of income taxes on non-GAAP adjustments   685     (335 )   (1,884 )   (1,530 )
Non-GAAP Net income $ 15,710   $ 11,875   $ 45,876   $ 37,127  
 
 
GAAP diluted earnings per share $ 1.39 $ 0.75 $ 2.68 $ 2.28
Non-GAAP adjustments:
Unrealized gains on marketable equity securities (0.17 ) (0.02 )
Legal costs and charges related to Caris’ legal investigation 0.02 0.46 0.05
Operating results for newly opened facilities not at full capacity (*) 0.02 0.04 0.05 0.11
Gain on acquisition of equity method investment (0.13 ) (0.13 )
Gain on sale of assets within equity method investment (0.05 ) (0.05 )
Stock-based compensation expense 0.02 0.02 0.07 0.05
Tax provision adjustment on 2017 filed income tax returns   (0.10 )       (0.10 )    
Non-GAAP diluted earnings per share $ 1.03   $ 0.78   $ 3.01   $ 2.44  
 
(*) The newly opened facilities consist of one skilled nursing facility and two assisted living facilities that opened during 2017.
 

National HealthCare Corporation
Brian F. Kidd, 615-890-2020
SVP
and Controller

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