Operations and Facilities - As of September 30, 2023, the company operates or manages 68 skilled nursing facilities with a total of 8,732 licensed beds, 26 assisted living facilities with 1,501 units, and 35 homecare agencies[135]. - The overall census in owned and leased skilled nursing facilities for the three months ending September 30, 2023, was 88.1%, up from 83.7% for the same period a year ago[143]. - The company has 39 skilled nursing facilities rated 4 and 5 stars, representing 57% of its total skilled nursing facilities, compared to 36% in the industry[147]. - The company has undertaken various development activities, including the acquisition of a 66-bed skilled nursing facility in Nashville, TN, in May 2023[149]. Financial Performance - The company reported a total net operating revenue of $288.485 million for the three months ended September 30, 2023, compared to $270.843 million for the same period in 2022, reflecting a year-over-year increase of approximately 6.5%[169]. - For the three months ended September 30, 2023, net operating revenues increased by 6.5% compared to the same period in 2022, primarily driven by occupancy increases in skilled nursing facilities and higher per diem rates from government payors[178]. - For the nine months ended September 30, 2023, net patient revenues reached $804.617 million, up from $776.661 million in the same period of 2022, indicating a growth of approximately 3.7%[170]. - The company’s non-GAAP net income for the three months ended September 30, 2023, was $13.250 million, compared to $7.783 million for the same period in 2022, representing an increase of approximately 70.3%[174]. - GAAP net income attributable to NHC for the quarter was $10,388,000, a significant improvement from a net loss of $2,429,000 in the same quarter of 2022[179]. - GAAP net income attributable to NHC for the nine months was $38,392,000, compared to $16,092,000 for the same period in 2022[193]. Revenue Sources - Inpatient services generated net patient revenues of $243.865 million, while homecare and hospice services contributed $33.140 million for the three months ended September 30, 2023, totaling $277.005 million in net patient revenues[169]. - The company recorded $0 of government stimulus income from the Provider Relief Funds for the three months ended September 30, 2023, compared to $10,940,000 for the same period in 2022[141]. - The company has recorded $4,232,000 in net patient revenues for supplemental Medicaid payments for the three months ended September 30, 2023, compared to $4,773,000 for the same period in 2022[142]. Costs and Expenses - Total costs and expenses for the three months ended September 30, 2023, were $275.460 million, resulting in an income from operations of $13.025 million[169]. - Total costs and expenses for the nine months ended September 30, 2023, increased by $5,277,000, or 0.7%, to $803,616,000[198]. - Salaries, wages, and benefits increased by $9,466,000, or 5.5%, to $182,664,000, but as a percentage of net operating revenues, it decreased to 63.3% from 63.9%[186]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended September 30, 2023, was $85,483,000, a significant increase from cash used in operating activities of $3,192,000 in the same period last year, representing a change of 2,778.0%[207]. - Cash used in investing activities totaled $7,382,000 for the nine months ended September 30, 2023, compared to $8,810,000 for the same period in 2022, reflecting a decrease of 16.2%[209]. - Cash used in financing activities was $32,711,000 for the nine months ended September 30, 2023, down from $35,541,000 in the same period last year, a reduction of 8.0%[210]. - Cash, cash equivalents, restricted cash, and restricted cash equivalents at the end of the period increased to $120,255,000, up 66.6% from $72,200,000 at the end of the same period last year[206]. - The company expects to meet its short-term liquidity requirements primarily from cash flows from operating activities, with current cash on hand of $100,308,000 and marketable securities of $110,186,000[211]. Regulatory and Payment Updates - The fiscal year 2024 rule equates to a net increase of 4.0%, or approximately $1.4 billion, in Medicare Part A payments to skilled nursing facilities compared to 2023 levels[153]. - Effective July 1, 2023, the state of Tennessee implemented specific individual nursing facility increases, estimated to result in approximately $15,000,000 annually, or $3,750,000 per quarter[156]. - The average Medicaid per diem increased by 7.9% for the first nine months of 2023 compared to the same period in 2022[160]. - The company anticipates a decrease in Medicare payments to home health agencies by 2.2% or $375 million for fiscal year 2024, relative to the prior year[163]. - The hospice payment update for fiscal year 2024 includes a rate increase of 3.1%, or $780 million, effective October 1, 2023[165]. - The statutory aggregate cap amount for hospice payments for FY2024 is set at $33,494, up from $32,487 in FY2023[165]. Investments and Marketable Securities - The fair value of marketable equity securities was approximately $125,820,000 as of September 30, 2023, with an investment in NHI comprising about $83,700,000, or 66.5% of the total fair value[220]. - At September 30, 2023, the company had available-for-sale marketable debt securities amounting to $126,911,000, allowing flexibility in responding to interest rate fluctuations[216]. - The company reported net unrealized gains of $71,600,000 in its equity securities, with $59,000,000 related to its investment in NHI[220]. - The company does not currently use derivative instruments to hedge interest rate exposure, and any future use would require approval from the Investment Committee of the Board of Directors[218].

Operations Overview - As of June 30, 2023, the company operates 68 skilled nursing facilities with a total of 8,732 licensed beds, 23 assisted living facilities with 1,181 units, and 35 homecare agencies[133]. - The overall occupancy rate in owned and leased skilled nursing facilities for the three months ending June 30, 2023, was 87.9%, up from 84.0% in the same period a year ago[141]. - The company has expanded its operations with new agencies and facilities, including a 135-unit assisted living facility in Vero Beach, FL, placed in service in July 2023[147]. - The company has 39 skilled nursing facilities rated 4 and 5 stars, representing 57% of its total skilled nursing facilities, compared to 37% in the industry[145]. Financial Performance - Total net operating revenues and grant income for the three months ended June 30, 2023, amounted to $282.58 million, up from $271.36 million in the same period of 2022, representing an increase of approximately 4.1%[166]. - Income from operations for the three months ended June 30, 2023, was $13.98 million, compared to $4.55 million in the same period of 2022, reflecting a significant increase of approximately 207%[166]. - For the six months ended June 30, 2023, net patient revenues reached $527.61 million, up from $516.41 million in the same period of 2022, marking an increase of about 2.2%[168]. - Non-GAAP net income for the three months ended June 30, 2023, was $13.66 million, compared to $7.17 million in the same period of 2022, indicating a growth of approximately 91%[172]. - The company reported GAAP diluted earnings per share of $1.06 for the three months ended June 30, 2023, compared to $0.21 in the same period of 2022, representing an increase of about 404%[172]. - GAAP net income attributable to NHC for the quarter was $16,281,000, a significant increase from $3,203,000 in the same quarter of 2022[177]. - For the six months ended June 30, 2023, GAAP net income attributable to NHC was $28,004,000, compared to $18,521,000 for the same period in 2022[191]. Revenue Sources - Supplemental Medicaid payments contributed $6,247,000 in net patient revenues for the three months ended June 30, 2023, compared to $5,001,000 for the same period in 2022[140]. - Inpatient services generated net patient revenues of $236.76 million for the three months ended June 30, 2023, an increase from $227.80 million in the same period of 2022, reflecting a growth of approximately 0.4%[166]. - Homecare and hospice services reported net patient revenues of $32.85 million for the three months ended June 30, 2023, compared to $32.28 million in the same period of 2022, indicating a growth of about 1.6%[166]. - Net patient revenues increased by $9,528,000, or 3.7%, compared to the same period last year[178]. - New operations contributed an increase of $5,890,000 in net patient revenues for the quarter, while the transfer of operations from seven facilities resulted in a decrease of $17,684,000[180]. Cost Management - The company's total costs and expenses for the three months ended June 30, 2023, were $268.61 million, compared to $266.81 million in the same period of 2022, showing a slight increase of about 0.7%[166]. - Total costs and expenses for the quarter increased by $1,797,000, or 0.7%, to $268,605,000[183]. - Salaries, wages, and benefits as a percentage of net operating revenues decreased to 62.0% from 64.5% year-over-year, despite a slight increase in total salaries[184]. - Total costs and expenses for the six months decreased by $3,418,000, or 0.6%, to $528,156,000[197]. Cash Flow and Liquidity - Cash provided by operating activities for the six months ended June 30, 2023, was $53,178,000, a significant increase from cash used in operating activities of $1,215,000 in the same period last year, representing a change of $54,393,000 or 4,476.8%[207]. - Cash used in investing activities totaled $2,247,000 for the six months ended June 30, 2023, compared to $8,163,000 for the same period in 2022, indicating a decrease of $5,916,000 or 72.5%[209]. - Cash used in financing activities was $22,891,000 for the six months ended June 30, 2023, compared to $18,797,000 in the same period last year, reflecting an increase of $4,094,000 or 21.8%[210]. - At June 30, 2023, the company had cash on hand of $78,492,000 and marketable equity and debt securities valued at $114,952,000, with a borrowing capacity of $50 million available on its credit facility[211]. - Cash flows from operating activities are expected to meet both short-term and long-term liquidity requirements, alongside current cash and marketable securities[211][212]. Market and Regulatory Environment - The statutory aggregate cap amount for Medicare hospice payments for FY2024 is set at $33,494, an increase from $32,487 in FY2023[163]. - CMS projects a decrease of 2.2% or $375 million in payments to home health agencies for FY2024, reflecting a 3.0% market basket update reduced by a 0.3% productivity adjustment[161]. Investments and Valuation - The fair value of marketable equity securities was approximately $128,939,000 as of June 30, 2023, with an investment in NHI comprising about $85.5 million or 66.3% of the total fair value[220]. - The company reported net unrealized gains of $74.7 million in its equity securities, with $60.7 million related to the investment in NHI[220]. - A hypothetical 10% change in quoted market prices would result in an increase or decrease in the fair value of equity investments of approximately $12.9 million[220]. - The company does not currently use derivative instruments to hedge interest rate exposure, and any future use would require approval from the Investment Committee of the Board of Directors[218].

Operations and Facilities - As of March 31, 2023, the company operates 68 skilled nursing facilities with a total of 8,732 licensed beds, 23 assisted living facilities with 1,181 units, and 34 homecare agencies[127]. - The company operates in 8 states, primarily in the southeastern United States, and is focused on expanding its senior care operations[127]. - The company has 40 skilled nursing facilities rated 4 and 5 stars, representing 59% of its total skilled nursing facilities, compared to 37% in the industry[137]. Financial Performance - For the three months ended March 31, 2023, net operating revenues and grant income decreased by 3.4% to $269,563,000 compared to $278,983,000 for the same period in 2022, primarily due to a reduction in government stimulus income of $10,620,000[164]. - GAAP net income attributable to the company for Q1 2023 was $11,723,000, down from $15,318,000 in Q1 2022, while adjusted net income decreased to $12,071,000 from $14,081,000[165]. - Net patient revenues increased by $1,670,000, or 0.7%, compared to the same period last year, with an average census at skilled nursing facilities rising to 87.4% from 82.7%[166][167]. - Total costs and expenses decreased by $5,215,000, or 2.0%, to $259,551,000 in Q1 2023 from $264,766,000 in Q1 2022[172]. - Non-operating income increased by $1,124,000 compared to the same period last year[176]. - The income tax provision for Q1 2023 was $4,436,000, reflecting an effective income tax rate of 28.2%[177]. Revenue Sources - The company recorded $0 and $10,620,000 of government stimulus income from the Provider Relief Funds for the three months ended March 31, 2023, and 2022, respectively[131]. - The average Medicare per diem rate for skilled nursing facilities increased by 2.1% in the first three months of 2023 compared to the same period in 2022[144]. - The company estimates an increase in revenue of approximately $3,200,000 annually from specific individual nursing facility increases in Tennessee for fiscal year 2023[145]. - The proposed rule for fiscal year 2024 indicates a net increase of 3.7%, or approximately $1.2 billion, in Medicare Part A payments to skilled nursing facilities compared to 2023 levels[143]. - The company has recorded $4,883,000 in net patient revenues for supplemental Medicaid payments for the three months ended March 31, 2023[132]. Staffing and Labor - The company faced workforce and labor shortages, leading to increased wage pressure and a 34% decrease in agency nurse staffing expenses compared to the previous year[173]. - Salaries, wages, and benefits decreased by $2,870,000, or 1.7%, to $167,824,000, with salaries as a percentage of net operating revenues increasing to 62.3% from 61.2%[173]. - Salaries, wages, and benefits rose by $21,535,000, or 14.4%, totaling $170,694,000, with agency nurse staffing expenses increasing by $12,435,000[186]. Marketable Securities and Investments - At March 31, 2023, the fair value of marketable equity securities was approximately $124,210,000, with net unrealized gains of $70.0 million[206]. - The investment in NHI comprises approximately $84.1 million, or 67.7% of the total fair value of the equity securities portfolio[206]. - A hypothetical 10% change in quoted market prices would result in a related increase or decrease in the fair value of equity investments of approximately $12.4 million[206]. - The company's equity securities had net unrealized gains of $70.0 million as of March 31, 2023[206]. - Of the $70.0 million in unrealized gains, $59.4 million is related to the investment in NHI[206]. Cash Flow and Liquidity - Cash provided by operating activities was $13,857,000, a significant improvement from cash used in operating activities of $27,457,000 in the same period last year[193]. - The company expects to meet its short-term liquidity requirements primarily from cash flows from operating activities, with current cash on hand of $46,144,000[197]. Changes in Patient Revenue - The transfer of operations for seven skilled nursing facilities resulted in a decrease of $16,603,000 in net patient revenues for Q1 2023 compared to the same quarter last year[168]. - Net patient revenues increased by $39,482,000, or 18.2%, compared to the same period last year[181]. - The average census at owned and leased skilled nursing facilities was 82.7%, up from 76.8% in the same quarter a year ago[182].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to _____________ Commission File No. 001-13489 (Exact name of registrant as specified in its Corporate Charter) Delaware 52-205747 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-13489 (Exact name of registrant as specified in its Charter) Delaware 52-2057472 (State or other jurisdiction of (I.R.S. E ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ____________ Commission file number 001-13489 (Exact name of registrant as specified in its Charter) Delaware 52-2057472 (State or other juris ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to _____________ Commission File No. 001-13489 (Exact name of registrant as specified in its Corporate Charter) Delaware 52-2057472 (State o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ____________ Commission file number 001-13489 (Exact name of registrant as specified in its Charter) Delaware 52-2057472 (State or other jurisdiction of (I.R. ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 001-13489 (Exact name of registrant as specified in its Charter) Delaware 52-2057472 (State or other jurisdiction ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to ____________ Commission file number 001-13489 (Exact name of registrant as specified in its Charter) Delaware 52-2057472 (State or other jurisd ...