NHC(US:NHC)2025-05-08 20:13PART I. FINANCIAL INFORMATION This section details the company's financial statements, management's analysis, market risks, and internal controls Financial Statements This section presents the unaudited interim condensed consolidated financial statements, providing a comprehensive view of the company's financial position and performance Interim Condensed Consolidated Statements of Operations NHC reported significant year-over-year growth in Q1 2025, with net operating revenues increasing by 25.7% and income from operations nearly doubling Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Operating Revenues | $373,697 | $297,176 | 25.7% | | Income from Operations | $30,767 | $15,675 | 96.3% | | Net Income Attributable to NHC | $32,205 | $26,213 | 22.9% | | Diluted EPS | $2.07 | $1.69 | 22.5% | Interim Condensed Consolidated Balance Sheets NHC's balance sheet as of March 31, 2025, shows a slight increase in total assets, stable liabilities, and growth in total equity Consolidated Balance Sheet Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $455,204 | $424,408 | | Total Assets | $1,548,821 | $1,524,429 | | Total Current Liabilities | $239,225 | $234,797 | | Total Liabilities | $540,839 | $541,266 | | Total Equity | $1,007,982 | $983,163 | Interim Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities surged in Q1 2025, while cash was primarily used for investing and financing activities, including dividends and debt repayment Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $39,255 | $9,646 | | Net Cash used in Investing Activities | ($7,323) | ($2,415) | | Net Cash used in Financing Activities | ($12,693) | ($12,067) | | Net Increase/(Decrease) in Cash | $19,239 | ($4,836) | Notes to Interim Condensed Consolidated Financial Statements These notes provide detailed explanations of NHC's business operations, accounting policies, and financial statement components, including revenue breakdowns and contingencies - As of March 31, 2025, NHC operates or manages 80 skilled nursing facilities, 26 assisted living facilities, 34 homecare agencies, and 33 hospice agencies, primarily in the southeastern U.S25 Net Patient Revenue by Service Type (in thousands) | Service Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Inpatient services | $325,478 | $252,254 | | Homecare and hospice services | $36,129 | $33,569 | | Total | $361,607 | $285,823 | Net Patient Revenue by Payor Source (%) | Payor | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Medicare | 31% | 34% | | Managed Care | 11% | 10% | | Medicaid | 31% | 28% | | Private Pay and Other | 27% | 28% | - The company's subsidiary, Caris Healthcare, L.P., received a Civil Investigative Demand (CID) from the U.S. Attorney's Office in May 2024 related to billing for hospice services from January 1, 2019, and the company is cooperating with the request118 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strong Q1 2025 performance, attributing it to revenue growth, operational improvements, and a robust liquidity position - Net operating revenues grew 25.7% year-over-year, primarily due to the White Oak acquisition and an 8.5% increase in same-facility revenues158 - Non-GAAP adjusted net income increased 61.4% to $24.8 million in Q1 2025 from $15.4 million in Q1 2024, excluding unrealized gains and other adjustments159174 - Agency nurse staffing expense was significantly reduced to $1.5 million in Q1 2025 from $5.3 million in Q1 2024, indicating improved labor management165 - The overall census in owned and leased skilled nursing facilities increased to 89.3% in Q1 2025 from 88.5% in Q1 2024129 Results of Operations Net patient revenues significantly increased in Q1 2025, driven by acquisitions and higher per diem rates, while cost growth was slower, improving operating margins - The White Oak acquisition added $56.7 million in net patient revenues and $37.0 million in salary expenses in Q1 2025162166 Per Diem Rate Increases (Q1 2025 vs. Q1 2024) | Payor | Per Diem Increase (%) | | :--- | :--- | | Medicare | 5.2% | | Managed Care | 4.6% | | Medicaid | 6.2% | | Private Pay | 9.5% | - Other operating expenses increased 19.4%, but decreased as a percentage of revenue to 24.7% from 26.1% in the prior year, indicating improved cost control167 Segment Performance The Inpatient Services segment drove significant revenue and income growth, while Homecare and Hospice showed modest growth, and the 'All Other' category reported a larger operating loss Segment Performance (in thousands) | Segment | Net Operating Revenues (Q1 2025) | Income from Operations (Q1 2025) | Net Operating Revenues (Q1 2024) | Income from Operations (Q1 2024) | | :--- | :--- | :--- | :--- | :--- | | Inpatient Services | $325,851 | $32,648 | $252,269 | $14,954 | | Homecare and Hospice | $36,129 | $5,729 | $33,569 | $5,835 | | All Other | $11,717 | ($7,610) | $11,338 | ($5,114) | Liquidity and Capital Resources NHC maintains a strong liquidity position with substantial cash, marketable securities, and an undrawn credit facility, sufficient to meet obligations and fund growth - Primary sources of cash are from operations, management services, rental income, and investment income175 - The company has a $200 million credit facility ($150 million term, $50 million revolver) entered into on August 1, 2024, with no amounts outstanding on the revolver as of March 31, 2025109 - Management expects to meet liquidity requirements through cash flow from operations, current cash of $90.4 million, unrestricted marketable securities of $152.8 million, and borrowing capacity181182 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk affecting its debt and fixed-income portfolio, and equity price risk, particularly due to a concentrated investment in NHI - The company is exposed to interest rate risk on its $120.2 million in available-for-sale marketable debt securities and its variable-rate credit facility tied to SOFR186188 - The company faces significant equity price and concentration risk, with 69% of its $174.5 million equity portfolio invested in a single related-party entity, NHI191 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025192 - No material changes in internal control over financial reporting occurred during the quarter193 PART II. OTHER INFORMATION This section provides additional disclosures on legal proceedings, risk factors, and required exhibits Legal Proceedings This section refers to Note 16 for details on material legal proceedings, including a Civil Investigative Demand related to hospice billing practices - For details on legal proceedings, the report directs readers to Note 16 of the Form 10-Q195 Risk Factors There were no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported for the quarter ended March 31, 2025196 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and XBRL data files - The report includes standard exhibits such as CEO/CFO certifications (31.1, 31.2, 32) and Inline XBRL documents (101 series)200