National Research Corporation Announces Second Quarter Results

Rhea-AI Summary

National Research (NRC Health) announced its Q2 2024 results and corporate developments. Revenue decreased to $35 million from $36 million in Q2 2023, while earnings per diluted share dropped to $0.26 from $0.29. The company's net indebtedness stood at $42 million, with a total recurring contract value (TRCV) of $138 million as of June 30, 2024.

NRC Health amended its credit agreement, extending the revolving loan facility maturity to May 28, 2027, and modifying term loan conditions. The company has 1.1 million shares remaining in its stock repurchase plan and declared a quarterly cash dividend of $0.12 per share. Additionally, NRC Health acquired NOBL Health for approximately $6 million, adding $2 million in TRCV. The company is also releasing new consumer and employee experience capabilities, as well as a proprietary AI engine.

Positive

• Acquisition of NOBL Health for $6 million, adding $2 million in TRCV
• Credit agreement amendment extending revolving loan facility maturity to May 28, 2027
• Release of new consumer and employee experience capabilities and proprietary AI engine
• Quarterly cash dividend of $0.12 per share declared

Negative

• Revenue decreased from $36 million in Q2 2023 to $35 million in Q2 2024
• Earnings per diluted share dropped from $0.29 in Q2 2023 to $0.26 in Q2 2024
• Net indebtedness of $42 million as of June 30, 2024

Financial Analyst

National Research 's Q2 2024 results reveal a slight decline in revenue and earnings per share compared to Q2 2023. Revenue decreased from $36 million to $35 million, while EPS dropped from $0.29 to $0.26. The company's net indebtedness stands at $42 million, with a Total Recurring Contract Value (TRCV) of $138 million.

The credit agreement amendments are strategically positive, extending maturity dates and providing more flexibility for capital allocation. The acquisition of NOBL Health for $6 million plus potential earnout adds $2 million in TRCV, potentially boosting future revenue. The maintained quarterly dividend of $0.12 per share signals financial stability despite the slight performance dip.

Market Research Analyst

NRC Health's strategic moves indicate a focus on growth and innovation in the healthcare analytics sector. The acquisition of NOBL Health and the release of new products in consumer and employee experience showcase the company's commitment to expanding its portfolio. The integration of AI technology is particularly noteworthy, as it aligns with industry trends towards data-driven decision-making in healthcare.

The company's decision to forgo a conference call in favor of more comprehensive earnings releases suggests a shift in investor communication strategy. This approach may provide more detailed information to a wider audience, potentially increasing transparency and investor engagement. However, it also eliminates the opportunity for real-time Q&A, which some investors might miss.

Legal Expert

The Third Amendment to the Amended and Restated Credit Agreement brings significant legal and financial flexibility to NRC Health. Key changes include:

• Extended maturity of the revolving loan facility to May 28, 2027
• Adjusted term loan amortization schedule from 7 to 10 years
• Expanded uses for delayed draw-down term loans
• Increased capital expenditure exclusions from fixed charge coverage ratio

These amendments provide NRC with enhanced financial maneuvering capabilities, potentially facilitating future growth initiatives, acquisitions and shareholder returns. The extended commitment period for delayed draw-down term loans until May 2026 offers a longer runway for strategic investments, aligning with the company's apparent focus on portfolio expansion and technological advancement.

LINCOLN, Neb.--(BUSINESS WIRE)-- National Research Corporation, dba NRC Health, (NASDAQ:NRC) today announced results for the second quarter 2024 and several other corporate developments.

Financial Results

Revenue for the quarter was approximately $35 million compared with approximately $36 million in the 2023 quarter. Earnings per diluted share were $0.26 compared with $0.29 for the 2023 quarter. At June 30, 2024, the Company’s net indebtedness (total borrowing minus cash and cash equivalents) was approximately $42 million. Total recurring contract value (TRCV) was approximately $138 million at June 30, 2024.

Credit Agreement Amendment

Effective August 5, 2024, the Company and its lender entered into a Third Amendment to Amended and Restated Credit Agreement, with material amendments including the following: (i) extended the maturity of the revolving loan facility to May 28, 2027, (ii) provided that all term loans will amortize over a ten-year amortization schedule (rather than the prior seven-year schedule) and bear interest at floating annual rate of SOFR + 235 basis points, with the maturity date for all term loans remaining May 28, 2027, (iii) extended the commitment period for making delayed draw-down term loans to May 28, 2026, (iv) expanded the permitted uses of delayed draw-down term loans to include dividends, stock repurchases, acquisitions, and capital expenditures as permitted by the agreement, and (v) increased the amount of capital expenditures to be excluded from fixed charge coverage ratio by $2.5 million.

Stock Repurchase Plan

The Company has approximately 1.1 million shares remaining under its existing stock repurchase plan. The Company did not repurchase any shares in the second quarter of 2024 pending the credit agreement amendments discussed above. Management is authorized to complete the plan in its discretion, credit agreement limitations, and future capital allocation decisions.

Dividend

The Company’s Board of Directors has declared a quarterly cash dividend of $0.12 (twelve cents) per share payable Friday, October 11, 2024, to stockholders of record as of the close of business on Friday, September 27, 2024.

Portfolio and Strategy Update

On July 15, 2024, the Company acquired NOBL Health, a leading provider of patient rounding insights and workflow applications. The enterprise value of the acquisition was approximately $6 million paid in cash at closing plus a potential earnout of up to $1 million based on future performance of the acquired products. NOBL had approximately $2 million of TRCV at the acquisition date.

The Company’s has and will, over the next 30 days, release acquired and internally developed products and features including:

• Consumer experience (CX) capabilities designed to build loyalty and growth for health systems.
• Employee experience (EX) capabilities powered by one of the leading consumer experience technology platforms.
• NOBL Health’s rounding tool, which provides real time feedback from patients and healthcare employees.
• A proprietary AI engine powering new products and features.

In Lieu of Conference Call

The Company has elected to include strategic updates normally discussed in earning calls to a broader group of current and potential stockholders via its quarterly earnings releases.

About NRC Health

For more than 40 years, NRC Health (NASDAQ: NRC) has led the charge to humanize healthcare and support organizations in their understanding of each unique individual. NRC Health’s commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market research, and emphasis on consumer preferences are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems. For more information, email info@nrchealth.com, or visit www.nrchealth.com.

This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “believes,” “expect,” “focus,” “potential,” “will,” derivations thereof, and similar terms and phrases. In this press release, the statements related to releasing new products and features, future quarterly conference calls and other communications, and stock repurchases are forward-looking statements. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements, including those risks and uncertainties as set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2023, and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY Unaudited Condensed Consolidated Statements of Income (In thousands, except per share data)
		Three months ended June 30								Six months ended June 30
		2024				2023				2024				2023
Revenue		$	35,021			$	36,161			$	70,334			$	72,634
Operating expenses:
Direct			13,422				13,309				27,278				27,589
Selling, general and administrative			11,221				11,966				22,471				23,750
Depreciation and amortization			1,513				1,521				2,960				2,915
Total operating expenses			26,156				26,796				52,709				54,254
Operating income			8,865				9,365				17,625				18,380
Other income (expense):
Interest income			25				273				69				523
Interest expense			(555	)			(192	)			(1,160	)			(433	)
Other, net			(11	)			(2	)			(16	)			(15	)
Total other income (expense)			(541	)			79				(1,107	)			75
Income before income taxes			8,324				9,444				16,518				18,455
Provision for income taxes			2,149				2,171				3,984				4,219
Net income		$	6,175			$	7,273			$	12,534			$	14,236
Earnings Per Share of Common Stock:
Basic Earnings Per Share		$	0.26			$	0.30			$	0.53			$	0.58
Diluted Earnings Per Share		$	0.26			$	0.29			$	0.52			$	0.58
Weighted average shares and share equivalents outstanding:
Basic			23,871				24,578				23,870				24,582
Diluted			23,915				24,716				23,934				24,727

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY Unaudited Condensed Consolidated Balance Sheets (Dollars in thousands, except share amounts and par value)
		June 30, 2024				December 31, 2023
Assets
Current assets:
Cash and cash equivalents		$	485			$	6,653
Accounts receivable, net			10,057				12,378
Other current assets			6,408				5,329
Total current assets			16,950				24,360
Property and equipment, net			33,741				28,205
Goodwill			61,614				61,614
Other, net			6,794				8,258
Total assets		$	119,099			$	122,437
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable, net of unamortized debt issuance costs		$	7,566			$	7,214
Line of credit			9,000				--
Accounts payable and accrued expenses			6,675				6,194
Accrued compensation			4,370				3,953
Deferred revenue			14,514				14,834
Dividends payable			2,865				2,906
Other current liabilities			738				1,102
Total current liabilities			45,728				36,203
Notes payable, net of current portion and unamortized debt issuance costs			25,655				29,470
Other non-current liabilities			7,518				7,809
Total liabilities			78,901				73,482
Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued			--				--
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 31,072,144 in 2024 and 31,002,919 in 2023, outstanding 23,871,257 in 2024 and 24,219,887 in 2023			31				31
Additional paid-in capital			179,872				178,213
Retained earnings (accumulated deficit)			(23,726	)			(30,530	)
Treasury stock			(115,979	)			(98,759	)
Total shareholders’ equity			40,198				48,955
Total liabilities and shareholders’ equity		$	119,099			$	122,437

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806354663/en/

Linda A. Stacy

Principal Financial Officer

402-475-2525

Source: National Research Corporation

FAQ

What were NRC Health's Q2 2024 financial results?

NRC Health reported Q2 2024 revenue of $35 million, down from $36 million in Q2 2023. Earnings per diluted share were $0.26, compared to $0.29 in the same quarter last year.

Did NRC Health acquire any companies in 2024?

Yes, NRC Health acquired NOBL Health on July 15, 2024, for approximately $6 million in cash, with a potential earnout of up to $1 million based on future performance.

What is NRC Health's current dividend policy?

NRC Health declared a quarterly cash dividend of $0.12 per share, payable on October 11, 2024, to stockholders of record as of September 27, 2024.

How much is NRC Health's total recurring contract value (TRCV) as of Q2 2024?

NRC Health's total recurring contract value (TRCV) was approximately $138 million as of June 30, 2024.