NHC Reports Third Quarter 2018 Earnings

Business Wire

MURFREESBORO, Tenn.--(BUSINESS WIRE)-- 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

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. 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						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.