NHC(US:NHC)2023-05-04 20:08Operations 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].