NHC(US:NHC)2024-05-09 21:11Operations Overview - As of March 31, 2024, the company operates 65 skilled nursing facilities with a total of 8,421 licensed beds, 24 assisted living facilities with 1,365 units, and 35 homecare agencies[127]. - The overall occupancy rate in owned and leased skilled nursing facilities for the three months ending March 31, 2024, was 88.5%, an increase from 87.4% for the same period a year ago[131]. - The company has 40 skilled nursing facilities rated 4 and 5 stars, representing 62% of its total facilities, compared to the industry average of 36%[135]. - The average census at owned and leased skilled nursing facilities increased to 88.5% from 87.4% year-over-year[167]. - The average census at skilled nursing facilities increased to 87.4% from 82.7% year-over-year, with a 3.3% increase in composite skilled nursing facility per diem[182]. Financial Performance - For the first three months of 2024, net operating revenues increased by 10.2% to $297,176,000 compared to $269,563,000 for the same period in 2023[165]. - Net patient revenues rose by $27,816,000, or 10.8%, to $285,823,000 compared to $258,007,000 in the prior year[166]. - Total costs and expenses increased by $21,996,000, or 8.5%, to $281,547,000 from $259,551,000[171]. - Salaries, wages, and benefits as a percentage of net operating revenues decreased to 61.6% from 62.3% year-over-year[172]. - GAAP net income attributable to the company was $26,213,000 for Q1 2024, compared to $11,723,000 in Q1 2023[165]. - Non-GAAP net income for Q1 2024 was $15,048,000, up from $12,071,000 in Q1 2023[165]. - The effective income tax rate for the three months ended March 31, 2024, was 26.5%, resulting in an income tax provision of $9,462,000[177]. - For the quarter ended March 31, 2023, GAAP net income attributable to the company was $11,723,000, a decrease from $15,318,000 in the same period in 2022[180]. - Adjusted net income for the quarter was $12,071,000, down from $14,081,000 year-over-year, primarily due to a decrease of $10,620,000 in government stimulus income[180]. Revenue Sources - The average Medicare per diem rate for skilled nursing facilities increased by 4.7% in the first three months of 2024 compared to the same period in 2023[142]. - For the first three months of 2024, the average Medicaid per diem increased by 12.0% compared to the same period in 2023[148]. - The company estimates an annual revenue increase of approximately $15 million from Tennessee's Medicaid facility increases, $9 million from South Carolina, and $5 million from Missouri for fiscal year 2024[144][145][146]. - The fiscal year 2024 Medicare payment rates for skilled nursing facilities include a net increase of 4.0%, equating to approximately $1.4 billion in additional payments compared to 2023 levels[140]. - The composite skilled nursing facility per diem increased by 8.8%, with Medicare per diem rates up 4.7% and Medicaid rates up 12.0%[167]. Cash Flow and Investments - Cash provided by operating activities was $9,646,000, a decrease of 30.4% from $13,857,000 in the same period last year[196]. - Cash used in investing activities totaled $2,415,000, compared to $1,427,000 for the same period in the previous year[199]. - Cash used in financing activities was $12,067,000, a slight decrease from $12,619,000 year-over-year, with dividend payments totaling $9,051,000[200]. - As of March 31, 2024, the fair value of the company's marketable equity securities is approximately $152.7 million[211]. - The investment in NHI comprises approximately $102.5 million, or 67.1%, of the total fair value of the equity securities portfolio[211]. - 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 $15.3 million[211]. - The company's equity securities had net unrealized gains of $98.0 million as of March 31, 2024[211]. - Of the $98.0 million in unrealized gains, $77.7 million is related to the investment in NHI[211]. Risk Management - The company does not currently use any derivative instruments to hedge interest rate exposure[209]. - Credit risk is managed by diversifying the fixed maturity portfolio to avoid concentrations in any single industry group or issuer[210]. - The company has not used derivative instruments for trading purposes, and future use would require approvals from the Investment Committee[209]. - A hypothetical 1% change in interest rates would have minimal impact on future earnings and cash flows related to cash instruments[208]. - The company's cash and cash equivalents consist of highly liquid investments with a maturity of less than three months when purchased[208]. Expansion and Acquisitions - The company is expanding its senior care operations, including new agencies and acquisitions, such as a 66-bed skilled nursing facility acquired in Nashville, TN, in May 2023[137]. Liabilities - The accrued professional liability and workers' compensation reserves totaled $108.237 million as of March 31, 2024[138].