NHC Reports 2020 Year End Earnings

Rhea-AI Summary

National HealthCare Corporation (NHC) reported a 3.2% increase in net operating revenues for 2020 totaling $1,028,217,000, compared to $996,383,000 in 2019. However, excluding CARES Act funding, revenues would have declined by 4.2%. The GAAP net income was $41,871,000, down from $68,211,000 in 2019, leading to diluted EPS of $2.72. For Q4 2020, revenues increased by 2.3% to $259,825,000, but excluding CARES Act funds, a decrease of 8.1% would have been recorded. Q4 2020 reported GAAP net income rose to $27,550,000 from $13,770,000 in Q4 2019.

Positive

• 3.2% increase in net operating revenues for 2020 compared to 2019.
• Reported GAAP net income in Q4 2020 increased to $27,550,000.

Negative

• Excluding CARES Act funding, net operating revenues for 2020 decreased by 4.2%.
• GAAP net income for 2020 decreased from $68,211,000 in 2019 to $41,871,000.
• Diluted EPS dropped from $4.44 in 2019 to $2.72 in 2020.
• Q4 2020 adjusted net income decreased to $13,822,000 from $16,822,000 in Q4 2019.

National HealthCare Corporation (NYSE American: NHC), the nation's oldest publicly traded senior health care company, announced today net operating revenues and CARES Act income for the year ended December 31, 2020 totaled $1,028,217,000 compared to $996,383,000 for the year ended December 31, 2019, an increase of 3.2%. The CARES Act funding is intended to partially offset COVID-19 expenses and lost revenues. Excluding the CARES Act income and other government COVID revenues recorded during 2020, net operating revenues would have decreased 4.2% compared to 2019.

For the year ended December 31, 2020, the reported GAAP net income attributable to NHC was $41,871,000 compared to $68,211,000 for the 2019 year. Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the year ended December 31, 2020 was $58,543,000 compared to $59,616,000 for the 2019 year ^(*). GAAP diluted earnings per share were $2.72 and $4.44 for the years ended December 31, 2020 and 2019, respectively. Adjusted diluted earnings per share were $3.81 and $3.88 for the years ended December 31, 2020 and 2019, respectively ^(*).

Net operating revenues and CARES Act income for the quarter ended December 31, 2020 totaled $259,825,000 compared to $253,880,000 for the quarter ended December 31, 2019, an increase of 2.3%. Excluding the CARES Act income and other government COVID revenues recorded during the fourth quarter of 2020, net operating revenues would have decreased 8.1% compared to the fourth quarter of 2019. For the quarter ended December 31, 2020, reported GAAP net income attributable to NHC was $27,550,000 compared to $13,770,000 for the fourth quarter of 2019. Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income for the three months ended December 31, 2020 was $13,822,000 compared to $16,822,000 for the fourth quarter of 2019.

(*) - See the tables below that provide a reconciliation of GAAP to non-GAAP items.

About NHC

NHC affiliates operate for themselves and third parties 75 skilled nursing facilities with 9,463 beds. NHC affiliates also operate 24 assisted living communities, five independent living communities, one behavioral health hospital and 35 homecare programs. NHC’s other services include Alzheimer’s and memory care units, hospice services, pharmacy services, a rehabilitation services company, and providing management and accounting services to third party post-acute operators. Other information about the company can be found on our web site at www.nhccare.com.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company’s operations and measure the Company’s performance more consistently across periods. Therefore, the Company believes this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements. NHC cautions investors that any forward-looking statements made involve risks and uncertainties and are not guarantees of future performance. The risks and uncertainties are detailed from time to time in reports filed by NHC with the S.E.C., including Forms 8-K, 10-Q and 10-K, and include, among others, the following: liabilities and other claims asserted against us and patient care liabilities, as well as the resolution of current litigation; availability of insurance and assets for indemnification; national and local economic conditions; including their effect on the availability and cost of labor, utilities and materials; the effect of government regulations and changes in regulations governing the healthcare industry, including our compliance with such regulations; changes in Medicare and Medicaid payment levels and methodologies and the application of such methodologies by the government and its fiscal intermediaries; and other factors referenced or incorporated by reference in the S.E.C. filings. The risks included here are not exhaustive. All forward-looking statements represent NHC’s best judgment as of the date of this release.

Consolidated Statements of Income
(in thousands, except share and per share amounts)
		Three Months Ended								Year Ended
		December 31								December 31
		2020				2019				2020				2019
Revenues and grant income:
Net patient revenues		$	234,646			$	241,407			$	931,795			$	947,872
Other revenues			14,454				12,473				48,917				48,511
Government stimulus income			10,725				-				47,505				-
Net operating revenues and grant income			259,825				253,880				1,028,217				996,383
Costs and expenses:
Salaries, wages and benefits			153,359				151,390				609,306				592,831
Other operating			73,429				64,682				286,845				268,442
Facility rent			9,522				9,916				40,494				40,518
Depreciation and amortization			10,487				10,904				42,018				42,419
Interest			249				491				1,399				3,135
Total costs and expenses			247,046				237,383				980,062				947,345
Income from operations			12,779				16,497				48,155				49,038
Non-operating income			7,656				5,811				28,234				26,747
Unrealized gains/(losses) on marketable equity securities			16,614				(3,866	)			(23,966	)			12,230
Income before income taxes			37,049				18,442				52,423				88,015
Income tax provision			(9,633	)			(4,755	)			(10,433	)			(20,039	)
Net income			27,416				13,687				41,990				67,976
Net (income)/loss attributable to noncontrolling interest			134				83				(119	)			235
Net income attributable to National HealthCare Corporation		$	27,550			$	13,770			$	41,871			$	68,211
Net income per common share		$	1.80			$	0.90			$	2.74			$	4.47
Basic		$	1.79			$	0.89			$	2.72			$	4.44
Diluted
Weighted average common shares outstanding
Basic			15,311,947				15,278,771				15,306,174				15,270,154
Diluted			15,371,718				15,389,104				15,369,523				15,360,046
Dividends declared per common share		$	0.52			$	0.52			$	2.08			$	2.06
Balance Sheet Data
(in thousands)		Dec. 31				Dec. 31
		2020				2019
Cash, cash equivalents and marketable securities		$	323,445			$	202,787
Restricted cash, cash equivalents and marketable securities			158,162				158,082
Current assets			456,755				341,053
Property and equipment, net			520,318				535,430
Total assets			1,362,132				1,286,648
Current liabilities			281,228				194,763
NHC stockholders' equity			795,177				778,593

Selected Operating Statistics
		Three Months Ended								Year Ended
		December 31								December 31
		2020				2019				2020				2019
Skilled Nursing Per Diems:
Medicare		$	533.95			$	498.10			$	518.46			$	470.74
Managed Care			418.14				403.30				408.92				396.17
Medicaid			258.47				200.71				220.50				197.95
Private Pay and Other			250.54				243.68				249.61				242.99
Average Skilled Nursing Per Diem		$	317.94			$	275.03			$	290.10			$	271.07
Skilled Nursing Patient Days:
Medicare			96,943				102,798				387,540				428,367
Managed Care			58,085				62,956				223,629				251,691
Medicaid			290,979				343,348				1,289,435				1,332,025
Private Pay and Other			140,288				174,979				625,313				698,554
Total Skilled Nursing Patient Days			586,295				684,081				2,525,917				2,710,637
The tables below provide reconciliations of GAAP to non-GAAP items (in thousands, except per share amounts):
		Three Months Ended								Year Ended
		December 31								December 31
		2020				2019				2020				2019
Net income attributable to National Healthcare Corporation		$	27,550			$	13,770			$	41,871			$	68,211
Non-GAAP adjustments
Unrealized (gains)/losses on marketable equity securities			(16,614	)			3,866				23,966				(12,230	)
Gain on sale of real estate/healthcare facilities			(2,784	)			-				(2,784	)			-
Gain on acquisitions of equity method investments			-				-				(1,707	)			(1,975	)
Operating results for newly opened facilities not at full capacity (1)			200				(172	)			602				712
Stock-based compensation expense			646				430				2,453				1,878
Provision of income taxes on non-GAAP adjustments			4,824				(1,072	)			(5,858	)			3,020
Non-GAAP Net income		$	13,822			$	16,822			$	58,543			$	59,616
GAAP diluted earnings per share		$	1.79			$	0.89			$	2.72			$	4.44
Non-GAAP adjustments
Unrealized gains on marketable equity securities			(0.80	)			0.19				1.15				(0.59	)
Gain on sale of real estate/healthcare facilities			(0.13	)			-				(0.13	)			-
Gain on acquisitions of equity method investments			-				-				(0.08	)			(0.09	)
Operating results for newly opened facilities not at full capacity (1)			0.01				(0.01	)			0.03				0.03
Stock-based compensation expense			0.03				0.02				0.12				0.09
Non-GAAP diluted earnings per share		$	0.90			$	1.09			$	3.81			$	3.88

(1)

The newly opened facilities not at full capacity for the 2020 period presented consist of facilities opened from 2018 through 2020 (one memory care facility). The newly opened facilities for the 2019 period presented consist of facilities opened from 2017 through 2019 (one skilled nursing facility, two assisted living facilities, and one memory care facility).

 

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FAQ

What were the net operating revenues for NHC in 2020?

NHC reported net operating revenues of $1,028,217,000 for the year 2020.

How did NHC's net income change in 2020 compared to 2019?

NHC's GAAP net income decreased from $68,211,000 in 2019 to $41,871,000 in 2020.

What was the adjusted diluted EPS for NHC in 2020?

The adjusted diluted EPS for NHC in 2020 was $3.81.

How much did NHC's revenues increase in Q4 2020?

NHC's revenues increased by 2.3% to $259,825,000 in Q4 2020 compared to Q4 2019.

Did NHC experience any revenue decline excluding the CARES Act funding?

Yes, excluding CARES Act funding, net operating revenues decreased by 4.2% in 2020 and 8.1% in Q4 2020.