NATIONAL HEALTHCARE CORP
For the period ended Jun 30, 2024. Filed Aug 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 8, 2024
NHC$208.85+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001437749-24-015736
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001437749-24-025603
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 110 previous paragraphs and 113 current paragraphs.
59 unchanged; 35 reworded; 18 added; 13 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
On August 1, 2024, the Company purchased the White Oak portfolio including its long-term care pharmacy. White Oak’s portfolio consists of six skilled nursing facilities in North Carolina, three of which are continuing care retirement centers, and including one leased facility. The portfolio also includes nine skilled nursing facilities in South Carolina, one of which also includes assisted and independent living units. The total portfolio consists of 1,928 licensed beds, 48 assisted living units, and 302 independent living units.
Current report
Effective July 1, 2024 and for the fiscal year 2025, the state of Tennessee implemented specific individual nursing facility increases. We estimate the resulting increase in revenue for the 2025 fiscal year will be approximately $11,000,000 annually, or $2,750,000 per quarter. Additionally, the state of Tennessee implemented non-recurring rate increases for fiscal year 2025 for continued stabilization payments and Medicaid rate rebasing. These non-recurring rate increases will result in an additional increase in revenue for the 2025 fiscal year of approximately $8,200,000 annually, or $2,050,000 per quarter.
Current report
In June 2024, CMS released its proposed rule outlining fiscal year 2025 Medicare payment rates. CMS projects payments to home health agencies in fiscal year 2025 will decrease by 1.7% or $280 million, relative to the prior year. This decrease reflects a 2.5% home health payment update, reduced by a 3.6% decrease related to the Patient-Driven Groupings Model (“PDGM”) rebalancing and an estimated 0.6% decrease that reflects a proposed fixed dollar loss for outlier payments. As required by the Bipartisan Budget Act of 2018, this rule proposes a permanent prospective adjustment to the CY2025 home health payment rate to account for the impact of implementing the PDGM. This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY2020 implementation of PDGM and the change to a 30-day unit of payment.
Current report
During the three months ended June 30, 2024, the Company recognized $9,445,000 related to the Employee Retention Credit (“ERC”) that was established by the CARES Act and intended to help businesses retain their workforce and avoid layoffs during the pandemic. The ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees. During the second quarter of 2024, all conditions related to the assistance were met and the credit was recognized as government stimulus income.
Current report
Net patient revenues increased $10,313,000, or 3.8%, compared to the same period last year.
Current report
New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, three hospice agencies and one homecare agency, have attributed to an increase of $5,241,000 in net patient revenues for the quarter ended June 30, 2024 compared to the same quarter in the prior year.
Current report
Other revenues decreased $1,682,000, or 13.0%, compared to the same quarter last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.
Current report
Other operating expenses as a percentage of net operating revenues was 26.0% and 25.9% for the three months ended June 30, 2024 and 2023, respectively. New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, three hospice agencies and one homecare agency, have attributed to an increase of $2,084,000 in other operating expenses for the quarter ended June 30, 2024 compared to the same quarter in the prior year. For the second quarter of 2024, we also incurred acquisition-related expenses of $2,194,000 related to the August 1, 2024 acquisition of the White Oak portfolio.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
During the six months ended June 30, 2024, the Company recognized $9,445,000 related to the ERC that was established by the CARES Act and intended to help businesses retain their workforce and avoid layoffs during the pandemic. The ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees. During the second quarter of 2024, all conditions related to the assistance were met and the credit was recognized as government stimulus income.
Current report
Net operating revenues
Current report
Net patient revenues increased $38,129,000, or 7.2%, compared to the same period last year.
Current report
New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, three hospice agencies and one homecare agency, have attributed to 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.
Current report
Other revenues decreased $1,885,000, or 7.7%, compared to the same period last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.
Current report
Total costs and expenses for the six months ended June 30, 2024 compared to the same period of 2023 increased $31,529,000, or 6.0%, to $559,685,000 from $528,156,000.
Current report
New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, three hospice agencies and one homecare agency, have attributed to an increase of $5,487,000 in salaries, wages, and benefits for the six months ended June 30, 2024 compared to the same period in the prior year.
Current report
On March 1, 2024, the Company exited the lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in salaries, wages, and benefits decreasing $7,973,000 for the six months ended June 30, 2024 compared to the same period in the prior year.
Current report
On March 1, 2024, the Company exited the lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in other operating expenses decreasing $2,145,000 for the six months ended June 30, 2024 compared to the same quarter in the prior year.
Removed paragraphs (13)
Previous report
Effective July 1, 2023 and for the fiscal year 2024, the state of Tennessee implemented specific individual nursing facility increases. We estimate the resulting increase in revenue for the 2024 fiscal year will be approximately $15,000,000 annually, or $3,750,000 per quarter.
Previous report
Net patient revenues increased $27,816,000, or 10.8%, compared to the same period last year.
Previous report
New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, two behavioral health hospitals, two hospice agencies and two homecare agencies, have attributed to an increase of $7,727,000 in net patient revenues for the quarter ended March 31, 2024 compared to the same quarter in the prior year.
Previous report
Other revenues decreased $203,000, or 1.8%, compared to the same quarter last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.
Previous report
Results for the quarter ended March 31, 2023 compared to the first quarter of 2022 include a 3.4% decrease in net operating revenues and grant income. The net operating revenues and grant income decrease was primarily driven by the reduction in government stimulus income of $10,620,000 during the first quarter of 2023 compared to the same period a year ago, as well as us exiting seven skilled nursing facilities in Massachusetts and New Hampshire during the third quarter of 2022. Excluding the government stimulus income and the seven skilled nursing facilities in Massachusetts and New Hampshire, same-facility net operating revenues increased 7.1% during the first quarter of 2023 compared to the same period a year ago.
Previous report
Net patient revenues increased $1,670,000, or 0.7%, compared to the same period last year.
Previous report
In September 2022, the Company transferred the operations of seven skilled nursing facilities located in Massachusetts and New Hampshire resulting in net patient revenues decreasing $16,603,000 for the three months ended March 31, 2023 compared to the same quarter last year.
Previous report
Other revenues decreased $470,000, or 3.9%, compared to the same quarter last year, as further detailed in Note 4 to our interim condensed consolidated financial statements.
Previous report
During the three months ended March 31, 2023 and 2022, respectively, we recorded $0 and $10,620,000 in government stimulus income related to funds received from the CARES Act Provider Relief Fund.
Previous report
Total costs and expenses for the three months ended March 31, 2023 compared to the same period of 2022 decreased $5,215,000, or 2.0% to $259,551,000 from $264,766,000.
Previous report
In September 2022, the Company transferred the operations of seven skilled nursing facilities located in Massachusetts and New Hampshire resulting in salaries, wages, and benefits decreasing $11,884,000 for the three months ended March 31, 2023 compared to the same quarter last year.
Previous report
Noncontrolling interest
Previous report
On February 21, 2024, Change Healthcare was the target of a ransomware attack. The Company uses Change Healthcare as an intermediary to process and pay our governmental and insurance company healthcare claims. With Change Healthcare’s systems being down during the first quarter of 2024, we had to manually bill the majority of our skilled nursing claims for the months of February and March 2024. Although we manually billed our skilled nursing healthcare claims in February and March 2024, we were not paid as we typically would in the ordinary course of business. At March 31, 2024, our patient accounts receivable balances increased approximately $15 million from our December 31, 2023 accounts receivable balances. We believe this increase in accounts receivable is temporary and over the next several months we expect our accounts receivable balances and operating cash flow to be back to normal levels.
Reworded paragraphs (35)
Previous wording
National HealthCare Corporation (“NHC” or the “Company”) is a leading provider of senior health care services. As of March 31, 2024, we operate or manage, through certain affiliates, 65 skilled nursing facilities with a total of 8,421 licensed beds, 24 assisted living facilities with 1,365 units, five independent living facilities, three behavioral health hospitals, 35 homecare agencies, and 30 hospice agencies. We operate specialized care units within certain of our healthcare centers such as Alzheimer's disease care units and sub-acute nursing units. In addition, we provide insurance services, management and accounting services, and we lease properties to operators of skilled nursing and assisted living facilities. We operate in 8 states and are located primarily in the southeastern United States.
Current wording
National HealthCare Corporation (“NHC” or the “Company”) is a leading provider of senior health care services. As of June 30. 2024, we operate or manage, through certain affiliates, 65 skilled nursing facilities with a total of 8,421 licensed beds, 24 assisted living facilities with 1,365 units, five independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 30 hospice agencies. We operate specialized care units within certain of our healthcare centers such as Alzheimer's disease care units and sub-acute nursing units. In addition, we provide insurance services, management and accounting services, and we lease properties to operators of skilled nursing and assisted living facilities. We operate in 8 states and are located primarily in the southeastern United States.
Previous wording
A primary area of management focus continues to be the rates of occupancy within our skilled nursing facilities. The overall census in owned and leased skilled nursing facilities for the three months ending March 31, 2024 was 88.5% compared to 87.4% for the same period a year ago.
Current wording
A primary area of management focus continues to be the rates of occupancy within our skilled nursing facilities. The overall census in owned and leased skilled nursing facilities for the three months ending June 30, 2024 was 89.0% compared to 87.9% for the same period a year ago. For the six months ended June 30, 2024, overall census in our owned and leased skilled nursing facilities was 88.7% compared to 87.7% for the same period a year ago.
Previous wording
Our accrued professional liability and workers’ compensation reserves totaled $108,237,000 at March 31, 2024 and are a primary area of management focus. We have set aside restricted cash and cash equivalents and marketable securities to fund our estimated professional liability and workers’ compensation liabilities.
Current wording
Our accrued professional liability and workers’ compensation reserves totaled $109,254,000 at June 30, 2024 and are a primary area of management focus. We have set aside restricted cash and cash equivalents and marketable securities to fund our estimated professional liability and workers’ compensation liabilities.
Previous wording
In March 2024, CMS released its proposed rule outlining fiscal year 2025 Medicare payment rates and policy changes for skilled nursing facilities, which will begin on October 1, 2024. The fiscal year 2025 proposal equates to a net 4.1% increase in Medicare Part A payments to SNFs in fiscal year 2025 compared to 2024 levels. The rule includes a market basket increase of 2.8%, an increase of 1.7% to the market basket forecast error adjustment, and a negative 0.4% productivity adjustment. These figures do not incorporate the SNF Value Based Purchasing (“VBP”) reduction for certain SNFs subject to the net reduction in payments under the SNF VBP; those adjustments are estimated to total $196.5 million in fiscal year 2025.
Current wording
In July 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates and policy changes for skilled nursing facilities, which will begin on October 1, 2024. The fiscal year 2025 rule equates to a net 4.2% increase in Medicare Part A payments to SNFs in fiscal year 2025 compared to 2024 levels. The rule includes a market basket increase of 3.0%, an increase of 1.7% to the market basket forecast error adjustment, and a negative 0.5% productivity adjustment. This final rule also changes CMS’ enforcement policies to impose more equitable and consistent civil monetary penalties ("CMPs") for health and safety violations as part of the agency’s ongoing work to increase the safety and care provided in America’s nursing homes. CMS revised the regulation to expand the type of CMPs that can be imposed to allow for more per instance and per day CMPs to be imposed, as appropriate. In the final rule it also finalized updates to the SNF Quality Reporting Program ("QRP") to better account for adverse social conditions that negatively impact individuals’ health or healthcare. CMS also finalized its proposal to adopt a data validation process for the SNF QRP beginning the same year.
Previous wording
For the first three months of 2024, our average Medicare per diem rate for skilled nursing facilities increased 4.7% as compared to the same period in 2023.
Current wording
For the first six months of 2024, our average Medicare per diem rate for skilled nursing facilities increased 5.0% as compared to the same period in 2023.
Previous wording
Effective July 1, 2023 and for the fiscal year 2024, the state of Missouri implemented specific individual nursing facility increases. We estimate the resulting increase in revenue for the 2024 fiscal year will be approximately $5,000,000 annually, or $1,250,000 per quarter.
Current wording
Effective July 1, 2024 and for the fiscal year 2025, the state of Missouri implemented specific individual nursing facility increases. We estimate the resulting increase in revenue for the 2025 fiscal year will be approximately $1,784,000 annually, or $446,000 per quarter.
Previous wording
We have also received from many of the states in which we operate a supplemental Medicaid payment to help mitigate the inflationary labor and medical supplies costs resulting from the pandemic. We have recorded $3,462,000 and $4,883,000 in net patient revenues for these supplemental Medicaid payments for the three months ended March 31, 2024 and 2023, respectively.
Current wording
We have also received from many of the states in which we operate a supplemental Medicaid payment to help mitigate the inflationary labor and medical supplies costs resulting from the pandemic. We have recorded $2,585,000 and $6,247,000 in net patient revenues for these supplemental Medicaid payments for the three months ended June 30, 2024 and 2023, respectively. We have recorded $6,047,000 and $11,130,000 in net patient revenues for these supplemental Medicaid payments for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
For the first three months of 2024, our average Medicaid per diem increased 12.0% compared to the same period in 2023.
Current wording
For the first six months of 2024, our average Medicaid per diem increased 8.1% compared to the same period in 2023.
Previous wording
In March 2024, CMS released its proposed rule outlining fiscal year 2025 Medicare payment rates. CMS issued a rate increase of 2.6%, or $705 million, effective October 1, 2024. This increase is the result of a 3.0% market basket increase reduced by a 0.4% productivity adjustment. The FY2025 hospice payment update also includes an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made annually. The proposed cap amount for FY2025 is $34,365.
Current wording
In July 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates. CMS issued a rate increase of 2.9%, or $790 million, effective October 1, 2024. This increase is the result of a 3.4% market basket increase reduced by a 0.5% productivity adjustment. The FY2025 hospice payment update also includes an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made annually. The cap amount for FY2025 is $34,465.
Previous wording
Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, operating results for start-up healthcare operations not at full capacity, gains on sale of unconsolidated companies, and share-based compensation expense is helpful in allowing investors to assess the Company’s operations more accurately.
Current wording
Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, operating results for newly opened facilities or agencies not at full capacity, gains on sale of unconsolidated companies, share-based compensation expense, acquisition-related expenses, and the recognition of the employee retention credit is helpful in allowing investors to assess the Company’s operations more accurately.
Previous wording
The operating results for the newly constructed healthcare facilities not at full capacity for the three months ended March 31, 2024 include facilities that began operations from 2022 to 2024, which is two behavioral health hospitals, two homecare agencies, and two hospice agencies. For the three months ended March 31, 2023, included are facilities that began operations from 2021 to 2023, which is two behavioral health hospitals, one homecare agency, and two hospice agencies.
Current wording
The operating results for newly opened facilities or agencies not at full capacity include newly constructed healthcare facilities or agencies that are still considered in the start-up phase, which are two hospice agencies for the three and six months ended June 30, 3024. For the three and six months ended June 30, 2023, included are two behavioral health hospitals, two homecare agencies, and two hospice agencies. The acquisition-related expenses represent expenses incurred to acquire the White Oak portfolio that are not capitalizable.
Previous wording
The following table and discussion set forth items from the interim condensed consolidated statements of operations as a percentage of net operating revenues for the three months ended March 31, 2024 and 2023.
Current wording
The following table and discussion set forth items from the interim condensed consolidated statements of operations as a percentage of net operating revenues and grant income for the three and six months ended June 30, 2024 and 2023.
Previous wording
Results for the quarter ended March 31, 2024 compared to the first quarter of 2023 include a 10.2% increase in net operating revenues. For the quarter ended March 31, 2024, GAAP net income attributable to NHC was $26,213,000 compared to $11,723,000 for the same period in 2023. Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended March 31, 2024 was $15,048,000 compared to $12,071,000 for the same period in 2023. The increase in adjusted net income for the first quarter of 2024 compared to the first quarter of 2023 was primarily due the continued occupancy increase in our skilled nursing and assisted living facilities, skilled nursing per diem increases from some of our governmental payors, and the continued reduction of nurse agency staffing expense within our operations.
Current wording
Results for the quarter ended June 30, 2024 compared to the second quarter of 2023 include a 6.4% increase in net operating revenues and grant income. For the quarter ended June 30, 2024, GAAP net income attributable to NHC was $26,844,000 compared to $16,281,000 for the same period in 2023. Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, 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. The increase in adjusted net income for the three months ended June 30, 2024 compared to the same period of 2023 was primarily due to the per diem increases in our skilled nursing and assisted living facilities and the continued reduction of nurse agency staffing expense within our operations.
Previous wording
The total census at owned and leased skilled nursing facilities for the quarter averaged 88.5%, compared to an average of 87.4% for the same quarter a year ago. Overall, the composite skilled nursing facility per diem increased 8.8% compared to the same quarter a year ago. Our Medicare per diem rates increased 4.7% and managed care per diem rates increased 5.8% compared to the same quarter a year ago. Medicaid and private pay per diem rates increased 12.0% and 10.5%, respectively, compared to the same quarter a year ago. For the three months ended March 31, 2024 and 2023, respectively, $3,462,000 and $4,883,000 have been included in our net patient revenues for supplemental Medicaid payments that are in addition to our Medicaid skilled nursing per diems.
Current wording
The total census at owned and leased skilled nursing facilities for the quarter averaged 89.0%, compared to an average of 87.9% for the same quarter a year ago. Overall, the composite skilled nursing facility per diem increased 6.3% compared to the same quarter a year ago. Our Medicare per diem rates increased 5.3% and managed care per diem rates increased 0.7% compared to the same quarter a year ago. Medicaid and private pay per diem rates increased 4.5% and 13.7%, respectively, compared to the same quarter a year ago. For the three months ended June 30, 2024 and 2023, respectively, $2,585,000 and $6,247,000 have been included in our net patient revenues for supplemental Medicaid payments that are in addition to our Medicaid skilled nursing per diems.
Previous wording
On March 1, 2024, the Company exited a lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in net patient revenues decreasing $1,972,000 for the quarter ended March 31, 2024 compared to the same quarter in the prior year.
Current wording
On March 1, 2024, the Company exited a lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in net patient revenues decreasing $8,974,000 for the quarter ended June 30, 2024 compared to the same quarter in the prior year.
Previous wording
Total costs and expenses for the three months ended March 31, 2024 compared to the same period of 2023 increased $21,996,000, or 8.5% to $281,547,000 from $259,551,000.
Current wording
Total costs and expenses for the three months ended June 30, 2024 compared to the same period of 2023 increased $9,533,000, or 3.5%, to $278,138,000 from $268,605,000.
Previous wording
Salaries, wages, and benefits as a percentage of net operating revenues was 61.6% compared to 62.3% for the three months ended March 31, 2024 and 2023, respectively. We continue to face workforce and labor shortages within all of our operations, which increases wage pressure in regards to retaining and attracting qualified healthcare partners (employees). We continue to work diligently to find solutions to reduce and eliminate the agency nurse staffing within our healthcare operations. Our agency staffing expense decreased approximately 51% for the three months ended March 31, 2024 compared to the same period of 2023.
Current wording
Salaries, wages, and benefits as a percentage of net operating revenues was 59.9% compared to 62.0% for the three months ended June 30, 2024 and 2023, respectively. We continue to work diligently to find solutions to reduce and eliminate the agency nurse staffing within our healthcare operations. Our agency staffing expense decreased approximately 57% for the three months ended June 30, 2024 compared to the same period of 2023.
Previous wording
New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, two behavioral health hospitals, two hospice agencies and two homecare agencies, have attributed to an increase of $3,591,000 in salaries, wages, and benefits for the quarter ended March 31, 2024 compared to the same quarter in the prior year.
Current wording
New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, three hospice agencies and one homecare agency, have attributed to an increase of $2,728,000 in salaries, wages, and benefits for the quarter ended June 30, 2024 compared to the same quarter in the prior year.
Previous wording
On March 1, 2024, the Company exited the lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in salaries, wages, and benefits decreasing $1,799,000 for the quarter ended March 31, 2024 compared to the same quarter in the prior year.
Current wording
On March 1, 2024, the Company exited the lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in salaries, wages, and benefits decreasing $6,174,000 for the quarter ended June 30, 2024 compared to the same quarter in the prior year.
Previous wording
Other operating expenses as a percentage of net operating revenues and grant income was 26.5% and 26.6% for the three months ended March 31, 2023 and 2022, respectively. The transfer of the operations of the seven skilled nursing facilities located in Massachusetts and New Hampshire, as noted above, resulted in other operating expenses decreasing $5,206,000 for the three months ended March 31, 2023 compared to the same quarter last year. We continue to face inflationary pressures in certain categories within other operating expenses as well, such as food/dietary supplies and drugs/pharmaceutical supplies.
Current wording
On March 1, 2024, the Company exited the lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in other operating expenses decreasing $2,299,000 for the quarter ended June 30, 2024 compared to the same quarter in the prior year.
Previous wording
Non–operating income increased by $1,124,000 compared to the same period last year, as further detailed in Note 5 to our interim condensed consolidated financial statements.
Current wording
Non–operating income increased by $1,260,000 compared to the same period last year, as further detailed in Note 6 to our interim condensed consolidated financial statements.
Previous wording
The income tax provision for the three months ended March 31, 2024 is $9,462,000 (an effective income tax rate of 26.5%).
Current wording
The income tax provision for the three months ended June 30, 2024 is $9,494,000 (an effective income tax rate of 25.9%).
Previous wording
For the quarter ended March 31, 2023, GAAP net income attributable to NHC was $11,723,000 compared to net income of $15,318,000 for the same period in 2022. Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended March 31, 2023 was $12,071,000 compared to $14,081,000 for the same period in 2022. The decrease in adjusted net income for the first quarter of 2023 compared to the first quarter of 2022 was primarily due to the $10,620,000 less in government stimulus income recorded during the current quarter.
Current wording
Results for the six months ended June 30, 2024 compared to the same period of 2023 include an 8.3% increase in net operating revenues and grant income. For the six months ended June 30, 2024, GAAP net income attributable to NHC was $53,057,000 compared to $28,004,000 for the same period in 2023. Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the quarter ended June 30, 2024 was $30,998,000 compared to $25,729,000 for the same period in 2023. The increase in adjusted net income for the six months ended June 30, 2024 compared to the same period of 2023 was primarily due to the per diem increases in our skilled nursing and assisted living facilities and the continued reduction of nurse agency staffing expense within our operations.
Previous wording
The total census at owned and leased skilled nursing facilities for the quarter averaged 87.4%, compared to an average of 82.7% for the same quarter a year ago. Overall, the composite skilled nursing facility per diem increased 3.3% compared to the same quarter a year ago. Our Medicare per diem rates increased 2.1% and managed care per diem rates increased 2.7% compared to the same quarter a year ago. Medicaid and private pay per diem rates increased 3.6% and 3.1%, respectively, compared to the same quarter a year ago. For the three months ended March 31, 2023 and 2022, respectively, $4,883,000 and $5,538,000 have been included in our net patient revenues for supplemental COVID-19 Medicaid payments.
Current wording
The total census at owned and leased skilled nursing facilities for the six months ended June 30, 2024 averaged 88.7%, compared to an average of 87.7% for the same period a year ago. Overall, the composite skilled nursing facility per diem increased 7.5% compared to the same period a year ago. Our Medicare per diem rates increased 5.0% and managed care per diem rates increased 3.3% compared to the same period a year ago. Medicaid and private pay per diem rates increased 8.1% and 12.1%, respectively, compared to the same period a year ago. For the six months ended June 30, 2024 and 2023, respectively, $6,047,000 and $11,130,000 have been included in our net patient revenues for supplemental Medicaid payments that are in addition to our Medicaid skilled nursing per diems.
Previous wording
Salaries, wages, and benefits as a percentage of net operating revenues and grant income was 62.3% compared to 61.2% for the three months ended March 31, 2023 and 2022, respectively. We continue to face workforce and labor shortages within all of our operations, which increases wage pressure in regards to retaining and attracting qualified healthcare partners (employees). The labor and workforce shortages have resulted in us contracting with agency nurse staffing companies. The agency nurse staffing companies charge inflated hourly rates; therefore, we are working diligently to find solutions to reduce and eliminate the agency nurse staffing within our healthcare operations. For the quarter ended March 31, 2023, our agency nurse staffing expense decreased $4,941,000, or approximately 34%, compared to the same period a year ago.
Current wording
Salaries, wages, and benefits as a percentage of net operating revenues was 60.8% compared to 62.1% for the six months ended June 30, 2024 and 2023, respectively. We continue to work diligently to find solutions to reduce and eliminate the agency nurse staffing within our healthcare operations. Our agency staffing expense decreased approximately 54% for the six months ended June 30, 2024 compared to the same period of 2023.
Previous wording
Other operating expenses as a percentage of net operating revenues was 26.1% and 26.5% for the three months ended March 31, 2024 and 2023, respectively. New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, two behavioral health hospitals, two hospice agencies and two homecare agencies, have attributed to an increase of $2,176,000 in other operating expenses for the quarter ended March 31, 2024 compared to the same quarter in the prior year. We continue to face inflationary pressures in certain categories within other operating expenses as well, such as food/dietary supplies and drugs/pharmaceutical supplies.
Current wording
Other operating expenses as a percentage of net operating revenues was 26.0% and 26.2% for the six months ended June 30, 2024 and 2023, respectively. New operations, which include one skilled nursing facility acquired May 1, 2023, three assisted living facilities that we began operating on July 1, 2023, three hospice agencies and one homecare agency, have attributed to an increase of $4,018,000 in other operating expenses for the six months ended June 30, 2024 compared to the same quarter in the prior year. For the six months ended June 30, 2024, we also incurred acquisition-related expenses of $2,194,000 related to the August 1, 2024 acquisition of the White Oak portfolio.
Previous wording
Non–operating income increased by $1,362,000 compared to the same period last year, as further detailed in Note 5 to our interim condensed consolidated financial statements. In January 2024, the Company sold its 50% joint venture ownership interest in a homecare agency located in Nashville, Tennessee. The total consideration paid to the company was $2,100,000, which resulted in a gain of $1,025,000.
Current wording
Non–operating income increased by $2,622,000 compared to the same period last year, as further detailed in Note 6 to our interim condensed consolidated financial statements.
Previous wording
The income tax provision for the three months ended March 31, 2023 is $4,436,000 (an effective income tax rate of 28.2%).
Current wording
The income tax provision for the six months ended June 30, 2024 is $18,956,000 (an effective income tax rate of 26.2%).
Previous wording
Net cash provided by operating activities for the three months ended March 31, 2024 was $9,646,000 as compared to 13,857,000 in the same period last year. Cash provided by operating activities consisted of net income of $26,251,000 and decreases to operating cash flows related to adjustments for non–cash items of $1,627,000. There was cash used for working capital needs in the amount of $14,634,000 for the three months ended March 31, 2024 compared to $6,017,000 for the same period a year ago.
Current wording
Net cash provided by operating activities for the six months ended June 30, 2024 was $60,307,000 as compared to $53,178,000 in the same period last year. Cash provided by operating activities consisted of net income of $53,357,000 and adjustments for non–cash items of $2,736,000. There was cash provided by working capital in the amount of $4,052,000 for the six months ended June 30, 2024 compared to $9,999,000 for the same period a year ago.
Previous wording
Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized gains on our marketable equity securities, gain on sale of an unconsolidated company, deferred taxes, and stock compensation.
Current wording
Included in the adjustments for non-cash items are depreciation and amortization expense, equity in earnings of unconsolidated investments, unrealized gains on our marketable equity securities, gain on sale of an unconsolidated company, deferred taxes, and stock compensation.
Previous wording
Net cash used in investing activities totaled $2,415,000 for the three months ended March 31, 2024, compared to $1,427,000 for the three months ended March 31, 2023. Cash used for property and equipment additions was $5,955,000 and $6,640,000 for the three months ended March 31, 2024, and 2023, respectively. Proceeds from the sale of marketable securities, net of purchases, resulted in cash provided by investing activity of $2,912,000 and $5,211,000 for the three months ended March 31, 2024 and 2023, respectively. In January 2024, the Company sold its 50% joint venture ownership interest in a homecare agency resulting in proceeds from the sale of $2,100,000.
Current wording
Net cash used in investing activities totaled $990,000 for the six months ended June 30, 2024, compared to $2,247,000 for the six months ended June 30, 2023. Cash used for property and equipment additions was $13,788,000 and $12,789,000 for the six months ended June 30, 2024, and 2023, respectively. Proceeds from the sale of marketable securities, net of purchases, resulted in cash provided by investing activity of $15,764,000 and $13,645,000 for the six months ended June 30, 2024 and 2023, respectively. In January 2024, the Company sold its 50% joint venture ownership interest in a homecare agency resulting in proceeds from the sale of $2,100,000. For the six months ended June 30, 2024, we contributed capital of $4,856,000 to a joint venture, multi-family development that is under construction in Franklin, Tennessee.
Previous wording
Net cash used in financing activities totaled $12,067,000 for the three months ended March 31, 2024 compared to $12,619,000 for the three months ended March 31, 2023. We made principal payments under our finance lease obligations in the amount of $860,000 and $1,218,000 for the three months ended March 31, 2024 and 2023, respectively. Cash used for dividend payments to common stockholders totaled $9,051,000 in the current year period compared to $8,748,000 for the same period a year ago. Cash provided by the issuance of common stock totaled $8,412,000 for the quarter ended March 31, 2024. We repurchased common shares outstanding in the amount of $9,900,000 and $2,482,000 for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Net cash used in financing activities totaled $19,680,000 for the six months ended June 30, 2024 compared to $22,891,000 for the six months ended June 30, 2023. We made principal payments under our finance lease obligations in the amount of $860,000 and $2,455,000 for the six months ended June 30, 2024 and 2023, respectively. Cash used for dividend payments to common stockholders totaled $18,137,000 in the current year period compared to $17,481,000 for the same period a year ago. Cash provided by the issuance of common stock totaled $11,239,000 for the six months ended June 30, 2024. We repurchased common shares outstanding in the amount of $11,402,000 and $2,482,000 for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
We expect to meet our short-term liquidity requirements primarily from our cash flows from operating activities. In addition to cash flows from operations, our current cash on hand of $93,982,000 and our marketable equity and debt securities of $123,524,000 are expected to be adequate to meet our contractual obligations, operating liquidity, and our growth and development plans in the next twelve months. We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities.
Current wording
We expect to meet our short-term liquidity requirements primarily from our cash flows from operating activities and our new $200 million credit facility, which was effective August 1, 2024. In addition to cash flows from operations, our current cash on hand of $136,214,000, our marketable equity and debt securities of $133,805,000, and our borrowing capacity on the $200 million credit facility are expected to be adequate to meet our contractual obligations, operating liquidity, and our growth and development plans in the next twelve months. We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities.
Previous wording
We expect to meet our long-term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $93,982,000 and our marketable equity and debt securities of $123,524,000. We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities.
Current wording
We expect to meet our long-term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $136,214,000, our marketable equity and debt securities of $133,805,000, and our borrowing capacity on the new $200 million credit facility. We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities.
Previous wording
Laws and regulations governing the Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation. Management believes that it is following all applicable laws and regulations in all material respects. However, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusions from the Medicare, Medicaid, and other federal healthcare programs.
Current wording
Laws and regulations governing Medicare, Medicaid and other federal healthcare programs are complex and subject to interpretation. Management believes that it is following all applicable laws and regulations in all material respects. However, compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusions from the Medicare, Medicaid, and other federal healthcare programs.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
On March 1, 2024, the Company exited a lease and transferred the operations of two skilled nursing facilities (included assisted living units) and one memory care facility located in Missouri. The exiting of these operations resulted in net patient revenues decreasing $10,869,000 for the six months ended June 30, 2024 compared to the same period in the prior year.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
Previous report — wording carried elsewhere
Net operating revenues and grant income
Previous report — wording carried elsewhere
The noncontrolling interest in subsidiaries is presented within total equity of the Company’s consolidated balance sheets. The Company presents the noncontrolling interest and the amount of consolidated net income attributable to NHC in its consolidated statements of operations. The Company’s earnings per share is calculated based on net income attributable to NHC’s stockholders. The carrying amount of the noncontrolling interest is adjusted based on an allocation of subsidiary earnings based on ownership interest.