NHC(US:NHC)2023-08-03 20:32Operations 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].