NHC(US:NHC)2024-08-08 21:07Operations Overview - As of June 30, 2024, the company operates or manages 65 skilled nursing facilities with a total of 8,421 licensed beds, 24 assisted living facilities with 1,365 units, and 34 homecare agencies[110]. - The overall census in owned and leased skilled nursing facilities for the three months ending June 30, 2024, was 89.0%, up from 87.9% for the same period a year ago[112]. - The overall census in owned and leased skilled nursing facilities for the six months ending June 30, 2024, was 88.7%, compared to 87.7% for the same period a year ago[112]. - The company has 62% of its skilled nursing facilities rated 4 and 5 stars, compared to 36% for the industry average[115]. - The company purchased the White Oak portfolio, which includes six skilled nursing facilities and totals 1,928 licensed beds[117]. Financial Performance - The Company reported net patient revenues of $245,385 thousand for inpatient services and $34,533 thousand for homecare and hospice for the three months ended June 30, 2024, totaling $279,918 thousand[131]. - Total costs and expenses for the Company were $278,138 thousand for the three months ended June 30, 2024, resulting in income from operations of $22,520 thousand[131]. - For the six months ended June 30, 2024, the Company reported net patient revenues of $497,638 thousand for inpatient services and $68,103 thousand for homecare and hospice, totaling $565,741 thousand[133]. - The Company’s total costs and expenses for the six months ended June 30, 2024, were $559,685 thousand, leading to income from operations of $38,149 thousand[133]. - The Company’s non-operating income for the three months ended June 30, 2024, was $4,956 thousand, contributing to income before income taxes of $36,600 thousand[131]. - For the three months ended June 30, 2024, GAAP net income attributable to the company was $26,844,000, a 64.5% increase from $16,281,000 in the same period of 2023[139]. - Adjusted net income for the quarter ended June 30, 2024 was $15,612,000, compared to $13,658,000 for the same period in 2023, reflecting a 14.3% increase[139]. - For the six months ended June 30, 2024, GAAP net income attributable to the company was $53,057,000, compared to $28,004,000 for the same period in 2023, representing an increase of 89.4%[149]. - Net patient revenues for the six months ended June 30, 2024 increased by $38,129,000, or 7.2%, compared to the same period last year[151]. Revenue Sources and Changes - The company recorded $2,585,000 in net patient revenues from supplemental Medicaid payments for the three months ended June 30, 2024[124]. - New operations contributed an increase of $9,803,000 in net patient revenues for the six months ended June 30, 2024, compared to the same period in the prior year[152]. - The company exited operations of two skilled nursing facilities and one memory care facility, resulting in a decrease of $10,869,000 in net patient revenues for the six months ended June 30, 2024[154]. - Other revenues decreased by $1,885,000, or 7.7%, compared to the same period last year[154]. Cost Management - Total costs and expenses increased by $31,529,000, or 6.0%, to $559,685,000 for the six months ended June 30, 2024, compared to $528,156,000 in the prior year[154]. - Total costs and expenses for the three months ended June 30, 2024 increased by $9,533,000, or 3.5%, to $278,138,000 from $268,605,000[145]. - Salaries, wages, and benefits as a percentage of net operating revenues decreased to 59.9% from 62.0% for the three months ended June 30, 2023[145]. - Salaries, wages, and benefits as a percentage of net operating revenues decreased to 60.8% for the six months ended June 30, 2024, from 62.1% in the prior year[155]. - Agency staffing expense decreased approximately 54% for the six months ended June 30, 2024, compared to the same period in 2023[155]. Medicare and Medicaid Impact - The average Medicare per diem rate for skilled nursing facilities increased by 5.0% for the first six months of 2024 compared to the same period in 2023[122]. - The fiscal year 2024 Medicare payment rates for skilled nursing facilities will see a net increase of 4.0%, approximately $1.4 billion, compared to 2023 levels[119]. - The state of Tennessee's individual nursing facility increases are estimated to result in an additional revenue of approximately $11 million annually for fiscal year 2025[122]. - In fiscal year 2025, CMS projects a decrease of 1.7% or $280 million in payments to home health agencies compared to the previous year[127]. - For fiscal year 2024, CMS issued a hospice payment rate increase of 3.1%, amounting to $780 million, effective October 1, 2023[127]. - For fiscal year 2025, CMS announced a hospice payment rate increase of 2.9%, totaling $790 million, effective October 1, 2024[128]. Cash Flow and Liquidity - Net cash provided by operating activities was $60,307,000 for the six months ended June 30, 2024, compared to $53,178,000 in the same period last year[161]. - Cash, cash equivalents, and restricted cash at the end of the period increased by 60.9% to $165,605,000 from $102,905,000[160]. - The company expects to meet short-term liquidity requirements primarily from cash flows from operating activities and a new $200 million credit facility effective August 1, 2024[164]. Marketable Securities - The fair value of marketable equity securities was approximately $154,883,000 as of June 30, 2024, with net unrealized gains of $107.1 million[170]. - As of June 30, 2024, the fair value of the company's marketable equity securities is approximately $154.9 million[170]. - The investment in NHI comprises approximately $110.4 million, or 71.3%, of the total fair value of the equity securities portfolio[170]. - 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 $15.5 million[170]. - The company's equity securities had net unrealized gains of $107.1 million as of June 30, 2024[170]. - Of the $107.1 million in unrealized gains, $85.7 million is related to the investment in NHI[170]. Non-GAAP Financial Measures - The Company emphasizes the importance of non-GAAP financial measures to provide a clearer assessment of ongoing operations and performance consistency across periods[135]. - The Company believes that excluding unrealized gains or losses on marketable equity securities and other specific items in non-GAAP measures helps investors assess operations more accurately[136].