Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Address of principal executive offices) (Zip Code) ☒ 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 001-35929 National Research Corporation (Exact name of R ...

National Research Corporation (NASDAQ:NRC) Q1 2022 Earnings Conference Call May 4, 2022 11:00 AM ET Company Participants Michael Hays - Chief Executive Officer Kevin Karas - Chief Financial Officer Conference Call Participants George D'Angelo - Alpine Peaks Capital Operator Hello, everyone, and welcome to the National Research Corporation First Quarter 2022 Earnings Call. My name is Seb, and I'll be your operator. [Operator Instructions] I will now hand the floor over to Mike Hays. Please go ahead. Michael ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2022 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2022, showing revenue growth but decreased net income and operating cash flow [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased slightly to $153.2 million as of March 31, 2022, primarily due to reduced cash and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $47,290 | $54,361 | | Total current assets | $68,921 | $73,707 | | Total assets | $153,154 | $157,540 | | **Liabilities & Equity** | | | | Total current liabilities | $41,569 | $40,388 | | Total liabilities | $71,668 | $72,203 | | Total shareholders' equity | $81,486 | $85,337 | | Total liabilities and shareholders' equity | $153,154 | $157,540 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2022 revenue grew 8.4% to $38.4 million, but net income and diluted EPS declined due to higher operating expenses Q1 2022 vs Q1 2021 Income Statement (in thousands, except per share amounts) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $38,441 | $35,464 | | Total operating expenses | $26,744 | $23,444 | | Operating income | $11,697 | $12,020 | | Net income | $8,539 | $9,232 | | Diluted Earnings Per Share | $0.34 | $0.36 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly decreased to $8.3 million, with substantial cash used in financing for share repurchases and dividends Q1 2022 vs Q1 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,290 | $14,408 | | Net cash used in investing activities | ($2,542) | ($4,238) | | Net cash used in financing activities | ($12,858) | ($1,429) | | Change in cash and cash equivalents | ($7,071) | $8,764 | - Significant cash outflows from financing activities in Q1 2022 included **$6.7 million** for share repurchases and **$3.0 million** for dividend payments, which were not present in Q1 2021[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue recognition from subscriptions, debt, increased effective tax rate, and acquisition payments - The company is a leading provider of analytics and insights for healthcare organizations in the U.S. and Canada, focusing on patient and employee experience[28](index=28&type=chunk) - The majority of revenues are derived from annually renewable, subscription-based service agreements[34](index=34&type=chunk) Revenue Disaggregation by Timing (in thousands) | Revenue Type | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Subscription services recognized ratably over time | $35,449 | $33,054 | | Services recognized at a point in time | $1,181 | $323 | | Fixed, non-subscription recognized over time | $586 | $579 | | Unit price services recognized over time | $1,225 | $1,508 | | **Total revenue** | **$38,441** | **$35,464** | - The effective tax rate increased to **25.3%** in Q1 2022 from **20.5%** in Q1 2021, primarily due to decreased tax benefits from share-based compensation awards and higher state income taxes[59](index=59&type=chunk) - The company's long-term debt consists of a term loan with a balance of **$25.6 million** as of March 31, 2022, with the company in compliance with all financial covenants[61](index=61&type=chunk)[65](index=65&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 financial results, noting revenue growth, decreased operating margin, and a slight decline in Recurring Contract Value [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Q1 2022 revenue increased 8.4% to $38.4 million, but operating income and margin declined due to higher expenses, with RCV also decreasing Q1 2022 vs Q1 2021 Key Metrics (in thousands, except percentages) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $38,441 | $35,464 | 8.4% | | Operating income | $11,697 | $12,020 | (2.7)% | | Operating margin | 30.4% | 33.9% | (10.3)% | | Recurring Contact Value | $147,574 | $149,490 | (1.3)% | - Revenue growth was driven by new customer sales and increased conference revenue[90](index=90&type=chunk) - Operating income and margin decreased due to growth in salary and benefit costs, investments in Human Understanding Solutions, workforce automation, and building renovations[94](index=94&type=chunk) - The decline in Recurring Contract Value was partly due to a strategy to focus on growing core digital solutions, which resulted in the elimination of certain legacy offerings, though core digital solutions experienced **positive RCV growth**[96](index=96&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $47.3 million in cash and available credit, planning significant capital expenditures for headquarters renovations - As of March 31, 2022, principal sources of liquidity included **$47.3 million** of cash, a **$30 million** unused line of credit, and a **$15 million** delayed draw term note[99](index=99&type=chunk) - The final **$2.0 million** payment for the PatientWisdom acquisition was made in January 2022 from cash on hand[105](index=105&type=chunk) - The company estimates future costs for its headquarters building renovations to be **$14.5 million** in 2022 and **$7 million** in 2023, expected to be funded through operating cash flows[106](index=106&type=chunk) - During Q1 2022, the company repurchased **166,692 shares** of its Common Stock for an aggregate of **$6.7 million**[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk exposures were reported compared to the prior Annual Report on Form 10-K - There were no material changes to the disclosures regarding market risk exposures from the last Annual Report on Form 10-K[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that as of the end of the period, the company's disclosure controls and procedures were effective[121](index=121&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[122](index=122&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers other information including legal proceedings, risk factors, equity sales, and exhibits for the reporting period [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal claims, not expected to materially impact financial position or results - The company is involved in routine claims and litigation, but management does not expect them to have a material adverse effect[124](index=124&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors from the prior Annual Report on Form 10-K, with no new significant risks identified - Significant risk factors are described in the Annual Report on Form 10-K for the year ended December 31, 2021[125](index=125&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its Q1 2022 stock repurchase activity, including 166,962 shares bought back and remaining availability Common Stock Repurchases in Q1 2022 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 – Jan 31, 2022 | 41,962 | $41.69 | | Feb 1 – Feb 28, 2022 | 125,000 | $39.43 | | Mar 1 – Mar 31, 2022 | - | - | - As of March 31, 2022, the maximum number of shares that may yet be purchased under the plan is **1,981**[129](index=129&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and financial statements in iXBRL format - Filed exhibits include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 1350, as well as financial statements in iXBRL format[134](index=134&type=chunk)

PART I [Business](index=4&type=section&id=Item%201.%20Business) National Research Corporation (NRC Health) provides analytics and insights to healthcare organizations, focusing on patient engagement and loyalty through subscription-based solutions - The company's business is centered on providing analytics and insights to healthcare organizations to enhance patient engagement and loyalty through a portfolio of subscription-based solutions[15](index=15&type=chunk)[17](index=17&type=chunk) - NRC Health's solutions are divided into three main categories: Market Insights, Experience, and Transparency[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - The company's growth strategy is four-pronged: increasing service scope with existing clients, winning new clients, introducing new solutions, and pursuing strategic acquisitions[27](index=27&type=chunk) - The healthcare information market is highly competitive, with key competitors including internal departments, small specialty firms, and larger firms like Press Ganey[34](index=34&type=chunk) - As of December 31, 2021, the company employed **511 associates**, with most working remotely due to the COVID-19 pandemic[47](index=47&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from the COVID-19 pandemic, contract renewals, intense competition, industry consolidation, third-party reliance, cybersecurity threats, and control by its CEO's family - The COVID-19 pandemic poses a risk as it has caused financial strain on healthcare clients, potentially leading them to reduce or eliminate services purchased from the company[52](index=52&type=chunk) - A substantial portion of revenue depends on renewable service contracts, with the ten largest clients accounting for **14% of total revenue in 2021**[56](index=56&type=chunk) - The company faces significant cybersecurity risks, having been the target of an external cyber-attack in February 2020 which caused a temporary suspension of services[66](index=66&type=chunk) - The company's principal shareholders, primarily trusts and entities controlled by the family of CEO Michael D. Hays, held approximately **52.4% of outstanding common stock** as of February 25, 2022, giving them effective control[74](index=74&type=chunk)[75](index=75&type=chunk) [Unresolved Staff Comments](index=16&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - There are no unresolved staff comments to report[83](index=83&type=chunk) [Properties](index=16&type=section&id=Item%202.%20Properties) The company's headquarters is an owned 62,000 square foot building in Lincoln, Nebraska, currently under renovation, with additional leased office spaces - The main property is an owned headquarters in Lincoln, Nebraska, which is undergoing renovations expected to be completed in early 2023[84](index=84&type=chunk) - The company leases several smaller office spaces, including one in Markham, Ontario, which will be terminated in late 2022 due to the closure of the Canadian office[85](index=85&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in claims and litigation in the normal course of business, with no expected material adverse effect on its financial position - The company is periodically involved in claims and litigation, but management does not expect the outcomes to have a material adverse effect on its financial position[86](index=86&type=chunk) [Mine Safety Disclosures](index=16&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[87](index=87&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=17&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, with $12.2 million in cash dividends declared in 2021 and an active share repurchase program - Cash dividends declared were **$12.2 million in 2021**, compared to $5.3 million in 2020 and $19.4 million in 2019[91](index=91&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | Nov 1 – Nov 30, 2021 | 24,298 | $41.48 | 256,193 | | Dec 1 – Dec 31, 2021 | 94,846 | $41.53 | 168,943 | Comparison of 5-Year Cumulative Total Return | | 12/16 | 12/17 | 12/18 | 12/19 | 12/20 | 12/21 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | National Research Corporation | 100.00 | 199.11 | 209.79 | 368.11 | 239.77 | 235.38 | | NASDAQ Composite | 100.00 | 129.64 | 125.96 | 172.17 | 249.51 | 304.85 | | Russell 2000 | 100.00 | 114.65 | 102.02 | 128.06 | 153.62 | 176.39 | [Reserved](index=18&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, revenue increased by 11.0% to $148.0 million and operating income grew by 17.8% to $50.3 million, driven by new sales and COVID-19 recovery Key Financial Metrics (2021 vs. 2020, in thousands) | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $147,954 | $133,277 | 11.0% | | Operating income | $50,270 | $42,677 | 17.8% | | Operating margin | 34.0% | 32.0% | 2.0 pts | | Recurring Contact Value | $150,937 | $145,079 | 4.0% | | Cash provided by operating activities | $46,344 | $40,636 | 14.0% | - Revenue growth in 2021 was primarily due to new customer sales and increased sales to existing clients, along with a recovery from COVID-19 related service reductions in 2020[110](index=110&type=chunk) - The company's principal sources of liquidity as of December 31, 2021, included **$54.4 million in cash**, an unused **$30 million line of credit**, and a **$15 million delayed draw term note**[121](index=121&type=chunk) - Significant future capital expenditures are planned for the headquarters building renovation, estimated at **$15 million in 2022** and **$7 million in 2023**[128](index=128&type=chunk) - The company acquired PatientWisdom, Inc. on January 4, 2021, for **$5.0 million in cash**[127](index=127&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=25&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risks relate to foreign currency exchange rates from its Canadian subsidiary and interest rates on its debt facilities - Foreign currency risk is primarily from the Canadian subsidiary, whose operations are expected to close by the end of 2022, which will eliminate this exposure[142](index=142&type=chunk) - The company is exposed to interest rate risk on its **$26.6 million fixed-rate Term Loan** and its variable-rate Line of Credit and Delayed Draw Term Loan, which are based on LIBOR[143](index=143&type=chunk)[144](index=144&type=chunk) - The company is aware of the planned phase-out of LIBOR and notes that its credit agreement allows the lender to designate a substitute index[145](index=145&type=chunk) [Financial Statements and Supplementary Data](index=26&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the independent auditor's report from KPMG LLP and the company's audited consolidated financial statements for the three years ended December 31, 2021 [Report of Independent Registered Public Accounting Firm](index=27&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the financial statements and internal controls, noting a Critical Audit Matter related to revenue recognition from subscription agreements - KPMG issued an unqualified (clean) opinion on the financial statements and internal controls[150](index=150&type=chunk) - A Critical Audit Matter was identified concerning the sufficiency of audit evidence over key terms within new and modified subscription-based service agreements, as these terms directly impact revenue recognition[158](index=158&type=chunk) [Consolidated Financial Statements](index=29&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $157.5 million and total liabilities of $72.2 million as of December 31, 2021, with net income of $37.5 million for the year Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total current assets | $73,707 | $54,112 | | Total assets | $157,540 | $133,423 | | Total current liabilities | $40,388 | $31,681 | | Total liabilities | $72,203 | $69,108 | | Total shareholders' equity | $85,337 | $64,315 | Consolidated Income Statement Data (in thousands) | | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenue | $147,954 | $133,277 | $127,982 | | Operating income | $50,270 | $42,677 | $43,035 | | Net income | $37,466 | $37,260 | $32,406 | | Diluted EPS | $1.46 | $1.45 | $1.26 | [Notes to Consolidated Financial Statements](index=34&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the PatientWisdom acquisition, goodwill, income taxes, debt, share-based compensation, leases, and the company's restructuring into a single operating segment - On January 4, 2021, the company acquired PatientWisdom, Inc. for **$5.0 million**, recognizing **$4.3 million in goodwill**[223](index=223&type=chunk)[225](index=225&type=chunk) - Subscription services recognized ratably over time constituted the majority of revenue, totaling **$137.0 million in 2021**[227](index=227&type=chunk) - The company's credit agreement includes a **$30 million revolving line of credit** and a term loan with a balance of **$26.6 million** at year-end 2021[238](index=238&type=chunk)[239](index=239&type=chunk) - In March 2021, the company changed its operating segments from six to one, reflecting a change in its corporate reporting structure[262](index=262&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=55&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable - Not applicable[265](index=265&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes - Management concluded that disclosure controls and procedures were effective as of December 31, 2021[266](index=266&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2021, based on the COSO framework[268](index=268&type=chunk) [Other Information](index=55&type=section&id=Item%209B.%20Other%20Information) The company has no other information to report for this item - No other information to report[271](index=271&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=55&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[272](index=272&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=56&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[275](index=275&type=chunk) [Executive Compensation](index=56&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[277](index=277&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=56&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Security ownership information is incorporated by reference from the 2022 Proxy Statement, detailing outstanding options and available securities under equity compensation plans - Information on security ownership of beneficial owners and management is incorporated by reference from the 2022 Proxy Statement[278](index=278&type=chunk) Equity Compensation Plan Information as of December 31, 2021 | Plan Category | Number of Securities to be issued upon exercise | Weighted average exercise price | Number of securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 477,640 | $30.88 | 1,586,867 | [Certain Relationships and Related Transactions, and Director Independence](index=57&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[282](index=282&type=chunk) [Principal Accountant Fees and Services](index=57&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2022 Proxy Statement - Required information is incorporated by reference from the 2022 Proxy Statement[283](index=283&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=58&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and exhibits filed as part of the Annual Report on Form 10-K, with schedules omitted if not applicable - This section provides an index of all exhibits filed with the Form 10-K, including corporate governance documents, credit agreements, equity plans, and certifications[289](index=289&type=chunk)[293](index=293&type=chunk) [Form 10-K Summary](index=59&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[292](index=292&type=chunk)

National Research Corporation (NASDAQ:NRC) Q4 2021 Earnings Conference Call February 12, 2021 11:00 AM ET Company Participants Michael Hays ??? Chief Executive Officer Kelvin Karas ??? Chief Financial Officer Conference Call Participants George D'Angelo ??? Alpine Peaks Capital Operator Good morning. Welcome to today's National Research Corporation Fourth Quarter 2021 earnings conference call. My name is Candy, and I will be your moderator for today's call. All lines will be muted during the presentation p ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents the unaudited condensed consolidated financial statements for the period ended September 30, 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $156.2 million, driven by increased cash, while shareholders' equity rose to $83.1 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $52,482 | $34,690 | | Total current assets | $72,726 | $54,112 | | Goodwill | $61,614 | $57,255 | | **Total assets** | **$156,186** | **$133,423** | | **Liabilities & Equity** | | | | Total current liabilities | $39,170 | $31,681 | | Total liabilities | $73,058 | $69,108 | | Retained earnings (deficit) | ($42,701) | ($61,375) | | **Total shareholders' equity** | **$83,128** | **$64,315** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Revenue grew 12.8% YoY in Q3 2021 to $37.8 million, though YTD net income slightly decreased due to higher taxes Income Statement Summary (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $37,767 | $33,477 | $109,656 | $98,503 | | Operating Income | $13,138 | $12,021 | $37,396 | $32,490 | | Net Income | $9,657 | $9,578 | $27,833 | $29,048 | | Diluted EPS | $0.38 | $0.37 | $1.08 | $1.13 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to $34.3 million, boosting end-of-period cash to $52.5 million Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $34,270 | $24,419 | | Net cash used in investing activities | ($6,797) | ($2,175) | | Net cash used in financing activities | ($9,680) | ($13,582) | | **Change in cash and cash equivalents** | **$17,792** | **$8,338** | | Cash and cash equivalents at end of period | $52,482 | $21,855 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details key events including the PatientWisdom acquisition, a segment structure change, and a higher effective tax rate - In March 2021, the company changed its operating segments from six to **one** to reflect a change in the corporate reporting structure[29](index=29&type=chunk) - On January 4, 2021, the company acquired PatientWisdom, Inc for **$5.0 million in cash**, resulting in **$4.3 million of goodwill**[57](index=57&type=chunk)[60](index=60&type=chunk) - The effective tax rate for the nine-month period increased to **23.0% in 2021** from 8.1% in 2020, mainly due to decreased tax benefits from share-based compensation awards[64](index=64&type=chunk) Revenue by Timing of Recognition (Nine Months Ended Sep 30, in thousands) | Revenue Type | 2021 | 2020 | | :--- | :--- | :--- | | Subscription services recognized ratably over time | $101,867 | $90,101 | | Services recognized at a point in time | $2,046 | $2,456 | | Fixed, non-subscription recognized over time | $2,014 | $1,740 | | Unit price services recognized over time | $3,729 | $4,206 | | **Total revenue** | **$109,656** | **$98,503** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses revenue growth driven by new sales, increased operating expenses, and the company's strong liquidity position - The company's workforce remains intact and highly engaged, with the vast majority working remotely, and limited company-related travel resumed in Q3 2021[96](index=96&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q3 revenue grew 12.8% YoY to $37.8 million, with rising SG&A expenses due to higher salary and service costs - Q3 2021 revenue increased **12.8% to $37.8 million** compared to Q3 2020, primarily due to new customer sales and recovery from COVID-19 related reductions in the prior year[102](index=102&type=chunk) - Q3 2021 SG&A expenses increased **19.7% to $9.5 million**, driven by higher salary and benefit costs ($440k), a favorable tax ruling in 2020, and increased contracted services ($217k)[104](index=104&type=chunk) - For the nine months ended Sep 30, 2021, revenue increased **11.3% to $109.7 million**, also due to new customer sales and increased sales to the existing client base[109](index=109&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $52.5 million in cash, unused credit facilities, and increased working capital - Principal sources of liquidity as of September 30, 2021, included **$52.5 million in cash**, a **$30 million unused line of credit**, and a **$15 million unused delayed draw term note**[116](index=116&type=chunk) - Working capital increased to **$33.6 million** at September 30, 2021, from $22.4 million at December 31, 2020, mainly due to a **$17.8 million increase in cash** and cash equivalents[118](index=118&type=chunk)[119](index=119&type=chunk) - The company was in compliance with its credit agreement covenants, including a minimum fixed charge coverage ratio of 1.10x and a maximum cash flow leverage ratio of 3.00x[136](index=136&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk disclosures have occurred since the 2020 Annual Report on Form 10-K - There are **no material changes** to the market risk disclosures from the company's 2020 Form 10-K[145](index=145&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes during the quarter - Management concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by this report[146](index=146&type=chunk) - There were **no changes in internal control** over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[147](index=147&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Ongoing litigation is not expected to have a material adverse effect on the company's financial condition - The company is involved in routine claims and litigation, but management does not expect them to have a **material adverse effect** on its financial condition[148](index=148&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) Refers to the significant risk factors detailed in the 2020 Annual Report on Form 10-K - Significant risk factors are described in the company's **Annual Report on Form 10-K** for the year ended December 31, 2020[149](index=149&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased in Q3 2021, with 280,491 shares remaining authorized for buyback - **No Common Stock was repurchased** during the third quarter of 2021[150](index=150&type=chunk) - As of September 30, 2021, **280,491 shares remain available for purchase** under the company's stock repurchase program[150](index=150&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the report, including CEO/CFO certifications and iXBRL financial statements - The exhibits filed with this report include **CEO and CFO certifications** and iXBRL formatted financial statements[154](index=154&type=chunk)

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 001-35929 National Research Corporation (Exact name of Registrant as specified in its charter) (State or oth ...

[PART I – Financial Information](index=4&type=section&id=PART%20I%20%E2%80%93%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements for the quarter ended March 31, 2021 [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2021, detailing financial position, performance, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $43,454 | $34,690 | | Total current assets | $62,235 | $54,112 | | Goodwill | $61,614 | $57,255 | | Total assets | $146,878 | $133,423 | | **Liabilities and Shareholders' Equity** | | | | Total current liabilities | $36,938 | $31,681 | | Total liabilities | $73,628 | $69,108 | | Total shareholders' equity | $73,250 | $64,315 | | Total liabilities and shareholders' equity | $146,878 | $133,423 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details the company's financial performance over a period, showing revenues, expenses, and net income Condensed Consolidated Statements of Income (in thousands, except per share data) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Revenue | $35,464 | $33,860 | | Total operating expenses | $23,444 | $22,666 | | Operating income | $12,020 | $11,194 | | Net income | $9,232 | $11,755 | | Basic Earnings Per Share | $0.36 | $0.47 | | Diluted Earnings Per Share | $0.36 | $0.46 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents net income and other comprehensive income items, reflecting all changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net income | $9,232 | $11,755 | | Foreign currency translation adjustment | $56 | $(1,124) | | Comprehensive income | $9,288 | $10,631 | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section details changes in the company's equity accounts, including net income, share repurchases, and other equity transactions - Total shareholders' equity increased from **$64.3 million** at December 31, 2020, to **$73.3 million** at March 31, 2021, primarily driven by net income of **$9.2 million**[20](index=20&type=chunk) - During the three months ended March 31, 2021, the company purchased **26,932 shares** of treasury stock for **$1.21 million**[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three months ended March 31, 2021 | Three months ended March 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $14,408 | $5,523 | | Net cash used in investing activities | $(4,238) | $(590) | | Net cash used in financing activities | $(1,429) | $(7,536) | | Change in cash and cash equivalents | $8,764 | $(3,496) | | Cash and cash equivalents at end of period | $43,454 | $10,021 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides additional details and explanations for the figures presented in the financial statements - In March 2021, the company changed its operating segments from six to one to reflect a change in corporate reporting structure[27](index=27&type=chunk) - On January 4, 2021, the company acquired substantially all assets of PatientWisdom, Inc. for a total consideration of **$5.0 million** in cash, adding a health engagement solution to its portfolio[56](index=56&type=chunk) - The effective tax rate for Q1 2021 was a **20.5% expense**, a significant increase from the **3.4% benefit** in Q1 2020, mainly due to decreased tax benefits from share-based compensation awards and higher state income taxes[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, liquidity, and capital resources for Q1 2021, highlighting revenue growth and operational changes [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's revenue, operating expenses, and profitability for the period, explaining key drivers of change Revenue and Operating Income Comparison (in millions) | Metric | Q1 2021 | Q1 2020 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $35.5 | $33.9 | +4.7% | | Operating Income | $12.0 | $11.2 | +7.1% | - Revenue growth was primarily due to new customer sales and increased sales to the existing client base, partially offset by a **$605,000** decrease in conference revenue due to a shift to a virtual format[101](index=101&type=chunk) - Direct expenses decreased by **4.8%** to **$11.9 million**, mainly due to lower postage, printing, and travel costs, despite an increase in contracted services[102](index=102&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **8.8%** to **$9.5 million**, driven by higher software, hosting, and contracted services costs, partially offset by lower travel expenses[103](index=103&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations - As of March 31, 2021, the company's principal sources of liquidity included **$43.5 million** in cash and cash equivalents, a **$30 million** unused line of credit, and a **$15 million** delayed draw term note[108](index=108&type=chunk) - Working capital increased to **$25.3 million** at March 31, 2021, from **$22.4 million** at December 31, 2020, primarily due to an **$8.8 million** increase in cash and cash equivalents[110](index=110&type=chunk)[111](index=111&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Provided by operating activities | $14,408 | $5,523 | | Used in investing activities | $(4,238) | $(590) | | Used in financing activities | $(1,429) | $(7,536) | - The company was in compliance with all financial covenants related to its credit facilities as of March 31, 2021[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk exposures compared to its prior annual report - There are no material changes to the disclosures regarding market risk exposures from the company's 2020 Annual Report on Form 10-K[139](index=139&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[140](index=140&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[141](index=141&type=chunk) [PART II – Other Information](index=30&type=section&id=PART%20II%20%E2%80%93%20Other%20Information) This section provides additional disclosures on legal proceedings, risk factors, equity sales, and exhibits [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal claims and litigation, with management not expecting a material adverse financial impact - The company is involved in claims and litigation from time to time in the normal course of business, but management does not expect any material adverse effect from the final disposition of current claims[142](index=142&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the significant risk factors detailed in the company's prior annual report that could materially affect its business - For a description of significant risk factors, the report refers to Part I, Item 1A of the company's annual report on Form 10-K for the year ended December 31, 2020[143](index=143&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company provides an update on its stock repurchase program, noting no repurchases during the quarter and remaining authorized shares - No Common Stock was repurchased under the company's authorization program during the three-month period ended March 31, 2021[145](index=145&type=chunk) - The remaining number of shares of Common Stock that may be purchased under the repurchase authorization is **280,491**[145](index=145&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including CEO and CFO certifications and iXBRL financial statements - The exhibits filed with this report include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 1350, as well as iXBRL formatted financial statements[151](index=151&type=chunk)

PART I [Business](index=3&type=section&id=Item%201.%20Business) NRC Health provides healthcare analytics, focusing on patient and employee experience, with **73.3% of 2020 revenue** from its digital VoC platform - NRC Health provides analytics and insights to help healthcare organizations measure and improve patient and employee experience, engagement, and loyalty[14](index=14&type=chunk) - The company's digital Voice of the Customer (VoC) platform, including Market Insights, Transparency, and Experience solutions, accounted for **73.3% of total revenue in 2020**[21](index=21&type=chunk) - Growth strategy focuses on increasing service scope with existing clients, winning new clients, developing new solutions, and pursuing strategic acquisitions[29](index=29&type=chunk) Revenue from Key Clients and Foreign Customers | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Revenue from Top 10 Clients** | 14% | 16% | 17% | | **Revenue from Foreign Customers** | 2% | 3% | 4% | - As of December 31, 2020, the company employed **485 associates**, with **13 in Canada**, and the majority operating remotely[52](index=52&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, contract renewals, intense competition, cybersecurity threats, and founder control - The COVID-19 pandemic presents significant risks, including economic slowdown, reduced demand for clients' elective services, and potential suspension of regulatory survey requirements by CMS[56](index=56&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk) - **14% of total revenue in 2020** came from the ten largest clients, making non-renewal a significant risk to operating results[64](index=64&type=chunk) - Cyber-attacks and data security incidents pose risks, as a February 2020 attack led to temporary service suspension, with future incidents potentially causing liability and reputational harm[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - As of February 26, 2021, trusts and entities controlled by CEO Michael D. Hays' family held approximately **54.0% of outstanding common stock**, granting effective control over shareholder approval matters[86](index=86&type=chunk)[87](index=87&type=chunk) [Unresolved Staff Comments](index=14&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - There are no unresolved staff comments to report[94](index=94&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) The company owns its Lincoln, Nebraska headquarters and is transitioning to a remote workforce, not renewing most leased office spaces - The company owns its headquarters in Lincoln, Nebraska, covering **62,000 square feet**[96](index=96&type=chunk) - Due to a transition to a remote workforce, the company does not anticipate renewing office leases in Markham, Seattle, and Atlanta upon expiration[97](index=97&type=chunk) [Legal Proceedings](index=15&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine claims and litigation, assessing and recording liabilities for probable and estimable losses - The company is involved in certain claims and litigation arising from the normal course of business, with management assessing and recording liabilities for probable and estimable losses[98](index=98&type=chunk) [Mine Safety Disclosures](index=15&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[99](index=99&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=16&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under "NRC," with a 2018 recapitalization eliminating Class B stock, and a stock repurchase program in place - In April 2018, a recapitalization exchanged Class B common stock for Class A common stock plus **$19.59 in cash**, eliminating Class B stock and reclassifying Class A as Common Stock (NRC)[103](index=103&type=chunk) Dividends Declared & Paid | Year | Dividends Declared & Paid (in millions) | | :--- | :--- | | **2020** | $5.3 | | **2019** | $19.4 (declared) | | **2018** | $29.7 (declared) | - The stock repurchase program has authorization remaining to purchase **280,491 shares** of Common Stock, with no shares repurchased in Q4 2020[105](index=105&type=chunk) [Selected Financial Data](index=18&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year financial summary (2016-2020), showing consistent revenue growth and fluctuating assets due to a 2018 recapitalization Five-Year Financial Summary | (In thousands, except per share data) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $133,277 | $127,982 | $119,686 | $117,559 | $109,384 | | **Operating income** | $42,677 | $43,035 | $35,275 | $34,219 | $31,197 | | **Net income** | $37,260 | $32,406 | $30,047 | $22,943 | $20,518 | | **Diluted EPS (Common Stock)** | $1.45 | $1.26 | $1.04 | $0.52 | $0.48 | | **Total assets** | $133,423 | $110,685 | $108,032 | $127,316 | $120,624 | | **Total shareholders' equity** | $64,315 | $32,892 | $19,083 | $90,041 | $82,806 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue increased **4.1% to $133.3 million** in 2020, but operating income slightly decreased due to higher expenses and a goodwill impairment, while liquidity remained strong - The COVID-19 pandemic impacted business with some clients reducing services, and management does not expect recent revenue and earnings growth to be indicative of future performance[118](index=118&type=chunk) - Operating income in 2020 was impacted by a **$1.1 million increase in depreciation and amortization** and a **$714,000 goodwill impairment charge** for the Canadian reporting unit[119](index=119&type=chunk)[128](index=128&type=chunk) Financial Performance Highlights | (In millions) | 2020 | 2019 | | :--- | :--- | :--- | | **Revenue** | $133.3 | $128.0 | | **Operating Income** | $42.7 | $43.0 | | **Net Income** | $37.3 | $32.4 | - As of December 31, 2020, the company had strong liquidity with **$34.7 million in cash and cash equivalents**, a **$30 million unused line of credit**, and a **$15 million delayed draw term note**[148](index=148&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=27&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's market risks include foreign currency exposure from its Canadian subsidiary and interest rate risk from its fixed-rate term loan and variable-rate line of credit - A hypothetical **10% change in the USD/CAD exchange rate** would impact the reported cash balance by approximately **$686,000** due to foreign currency risk from the Canadian subsidiary[183](index=183&type=chunk) - Interest rate risk exists for the **$30.7 million fixed-rate Term Loan** and variable-rate Line of Credit, with a **1% change in market rates impacting the fair value of fixed-rate debt by about $944,000**[184](index=184&type=chunk)[185](index=185&type=chunk) - The company acknowledges the expected phase-out of LIBOR in 2021, which affects its variable-rate credit facilities, with the credit agreement allowing for a substitute index[186](index=186&type=chunk) [Financial Statements and Supplementary Data](index=28&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2020, including the auditor's report, balance sheets, income statements, and detailed notes - KPMG LLP issued an opinion stating the consolidated financial statements are presented fairly and that the company maintained effective internal control over financial reporting as of December 31, 2020[191](index=191&type=chunk) - The auditor identified the evaluation of sufficiency of audit evidence over new and modified subscription-based service agreement terms as a critical audit matter due to subjective judgment in revenue recognition[198](index=198&type=chunk)[200](index=200&type=chunk) Consolidated Balance Sheet Highlights | (In thousands) | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $54,112 | $29,157 | | **Total Assets** | $133,423 | $110,685 | | **Total Current Liabilities** | $31,681 | $38,155 | | **Total Liabilities** | $69,108 | $77,793 | | **Total Shareholders' Equity** | $64,315 | $32,892 | - Subsequent to year-end, on January 4, 2021, the company acquired PatientWisdom, Inc. for **$5.0 million in cash** to enhance its health engagement solutions[319](index=319&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=55&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[321](index=321&type=chunk) [Controls and Procedures](index=55&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[322](index=322&type=chunk) - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of December 31, 2020[324](index=324&type=chunk) [Other Information](index=55&type=section&id=Item%209B.%20Other%20Information) The company reports no other information to disclose for this item - No other information is reported[327](index=327&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=56&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Required information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement[330](index=330&type=chunk) [Executive Compensation](index=56&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2021 Proxy Statement - Required information regarding executive compensation is incorporated by reference from the 2021 Proxy Statement[332](index=332&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=56&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Security ownership information is incorporated by reference from the 2021 Proxy Statement, with a table detailing equity compensation plans Equity Compensation Plan Information as of December 31, 2020 | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | **Equity compensation plans approved by security holders** | 600,571 | $25.31 | 1,610,219 | | **Equity compensation plans not approved by security holders** | -- | -- | -- | | **Total** | **600,571** | **$25.31** | **1,610,219** | [Certain Relationships and Related Transactions, and Director Independence](index=57&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's 2021 Proxy Statement - Required information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2021 Proxy Statement[338](index=338&type=chunk) [Principal Accountant Fees and Services](index=57&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information detailing the principal accountant's fees and services is incorporated by reference from the company's 2021 Proxy Statement - Required information regarding principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement[339](index=339&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=58&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including financial statements, corporate documents, and certifications - This section provides an index of all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications[343](index=343&type=chunk) [Form 10-K Summary](index=59&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary - None[346](index=346&type=chunk)

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, 2020 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 001-35929 National Research Corporation (Exact name of Registrant as specified in its charter) Wisconsin 47-0634000 (Stat ...