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What changed in NATIONAL HEALTHCARE CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NATIONAL HEALTHCARE CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+164 added−183 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in NATIONAL HEALTHCARE CORP's 2023 10-K

164 paragraphs added · 183 removed · 130 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

49 edited+7 added−4 removed70 unchanged
Biggest changeLouis, MO June 2022 Business Segments The Company has two reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals and (2) homecare and hospice services.
Biggest changeLouis, MO June 2022 Hospice New Agency 1 agency Cedar Bluff, VA March 2023 Skilled Nursing Acquisition 66 beds Nashville, TN May 2023 Homecare New Agency 1 agency Tallahassee, FL May 2023 Assisted Living Facility New Operations 135 units Vero Beach, FL July 2023 Assisted Living Facility New Operations 95 units Merritt Island, FL July 2023 Assisted Living Facility New Operations 100 units Stuart, FL July 2023 Business Segments The Company has two reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals and (2) homecare and hospice services.
The SNF PPS includes a new case-mix model called the Patient-Driven Payment Model (“PDPM”), which focuses on a resident’s condition and care needs, rather than the amount of care provided to determine reimbursement levels. PDPM utilizes clinically relevant factors for determining Medicare payment by using ICD-10 diagnosis codes and other patient characteristics as the basis for patient classification.
The SNF PPS includes a case-mix model called the Patient-Driven Payment Model (“PDPM”), which focuses on a resident’s condition and care needs, rather than the amount of care provided to determine reimbursement levels. PDPM utilizes clinically relevant factors for determining Medicare payment by using ICD-10 diagnosis codes and other patient characteristics as the basis for patient classification.
Also, CMS is implementing demonstration programs to bundle acute care and post–acute care reimbursement to hold providers accountable for costs across a broader continuum of care. These reimbursement methodologies and similar programs are likely to continue and expand, both in public and commercial health plans.
Also, CMS is implementing programs to bundle acute care and post–acute care reimbursement to hold providers accountable for costs across a broader continuum of care. These reimbursement methodologies and similar programs are likely to continue and expand, both in public and commercial health plans.
It also uses a sixth non-case mix component to cover utilization of skilled nursing facility (“SNF”) resources that do not vary depending on resident characteristics. 7 Table of Contents In July 2022, CMS released its final rule outlining fiscal year 2023 Medicare payment rates and policy changes for skilled nursing facilities, which began on October 1, 2022.
It also uses a sixth non-case mix component to cover utilization of skilled nursing facility (“SNF”) resources that do not vary depending on resident characteristics. 7 Table of Contents In July 2023, CMS released its final rule outlining fiscal year 2024 Medicare payment rates and policy changes for skilled nursing facilities, which began on October 1, 2023.
A second wholly owned insurance subsidiary is licensed in the Cayman Islands and provides general and professional liability coverage in substantially all of NHC’s owned and managed healthcare facilities. ● Rental Income. The healthcare properties currently owned and leased to third party operators include nine skilled nursing facilities and four assisted living communities. Government Stimulus Income.
A second wholly owned insurance subsidiary is licensed in the Cayman Islands and provides general and professional liability coverage in substantially all of NHC’s owned, leased and managed healthcare facilities. ● Rental Income. The healthcare properties currently owned and leased to third party operators include nine skilled nursing facilities and one assisted living communities. Government Stimulus Income.
Some states use, or have applied to use, waivers granted by CMS to implement expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards. Effective July 1, 2022 and for the fiscal year 2023, the state of Tennessee implemented specific individual nursing facility increases.
Some states use, or have applied to use, waivers granted by CMS to implement expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards. Effective July 1, 2023 and for the fiscal year 2024, the state of Tennessee implemented specific individual nursing facility increases.
Our behavioral health hospitals also participate in the Medicare and Medicaid program. During the fiscal years, we received payments from Medicare and, if participating, from Medicaid.
Our behavioral health hospitals also participate in the Medicare and Medicaid program. During the fiscal years presented, we received payments from Medicare and, if participating, from Medicaid.
All hospice care and services offered to patients and their families must follow an individualized written plan of care that meets the patient’s needs. ● Pharmacy Operations. At December 31, 2022, we operated four regional pharmacy locations (two locations in Tennessee and one location each in South Carolina and Missouri).
All hospice care and services offered to patients and their families must follow an individualized written plan of care that meets the patient’s needs. ● Pharmacy Operations. At December 31, 2023, we operated four regional pharmacy locations (two locations in Tennessee and one location each in South Carolina and Missouri).
Our licensed therapists provide physical, speech, respiratory and occupational therapy for patients recovering from strokes, heart attacks, orthopedic conditions, neurological illnesses, or other illnesses, injuries, or disabilities. We maintained a rehabilitation staff of over 1,200 highly trained, professional therapists in 2022. Most of our rehabilitative services are for patients in our owned and managed skilled nursing facilities.
Our licensed therapists provide physical, speech, respiratory and occupational therapy for patients recovering from strokes, heart attacks, orthopedic conditions, neurological illnesses, or other illnesses, injuries, or disabilities. We maintained a rehabilitation staff of over 1,200 highly trained, professional therapists in 2023. Most of our rehabilitative services are for patients in our owned, leased and managed skilled nursing facilities.
We also own the real estate of 13 healthcare properties and lease these properties to third party operators. We operate in 8 states and our operations are primarily located in the Southeastern and Midwestern parts of the United States.
We also own the real estate of 10 healthcare properties and lease these properties to third party operators. We operate in 8 states and our operations are primarily located in the Southeastern and Midwestern parts of the United States.
The I-SNP receives a per member, per month premium from Medicare which covers the members same health care benefits as original Medicare, as well as additional benefits including preventive screenings and routine vision coverage. At December 31, 2022, the I-SNP operated in the states of Tennessee, Missouri, and South Carolina with approximately 1,100 members enrolled in the plan. Other Revenues.
The I-SNP receives a per member, per month premium from Medicare which covers the members same health care benefits as original Medicare, as well as additional benefits including preventive screenings and routine vision coverage. At December 31, 2023, the I-SNP operated in the states of Tennessee, Missouri, and South Carolina with approximately 1,200 members enrolled in the plan. Other Revenues.
Effective April 1, 2022, sequestration was reinstated but only 1% was reduced from Medicare payments from April 1, 2022 through June 30, 2022. Beginning July 1, 2022, sequestration was increased back to the 2% reduction of Medicare payments for the remainder of 2022. The CARES Act extends the sequestration policy through 2030 in exchange for this temporary suspension.
Effective April 1, 2022, sequestration was reinstated but only 1% was reduced from Medicare payments from April 1, 2022 through June 30, 2022. Beginning July 1, 2022, sequestration was increased back to the 2% reduction of Medicare payments for the remainder of 2022. The CARES Act extended the sequestration policy through 2030 in exchange for the temporary suspension.
However, we also provide services to 68 additional health care providers. Our rates for these services are competitive with other market rates. ● Medical Specialty Units.
However, we also provide services to 41 additional health care providers. Our rates for these services are competitive with other market rates. ● Medical Specialty Units.
In addition, our facilities provide licensed therapy services, quality nutrition services, social services, activities, and housekeeping and laundry services. Revenues from the 59 facilities we own or lease are reported as net patient revenues in our financial statements. Management fee income is recorded as other revenues from the nine facilities that we manage.
In addition, our facilities provide licensed therapy services, quality nutrition services, social services, activities, and housekeeping and laundry services. Revenues from the 60 facilities we own or lease are reported as net patient revenues in our financial statements. Management fee income is recorded as other revenues from the eight facilities that we manage.
We also conduct an "Administrator in Training" course, which is 24 months in duration, for the professional training of skilled nursing facility administrators. Presently, we have three (two male and one female) full–time individuals in this program. All six of our regional vice presidents and 50 of our 68 health care center administrators are graduates of this program.
We also conduct an "Administrator in Training" course, which is 24 months in duration, for the professional training of skilled nursing facility administrators. Presently, we have six (four male and two female) full–time individuals in this program. All six of our regional vice presidents and 52 of our 68 health care center administrators are graduates of this program.
The following table sets forth sources of net patient revenues for the periods indicated: Year Ended December 31, Source 2022 2021 2020 Medicare 37% 36% 33% Managed Care 10% 11% 11% Medicaid 28% 29% 31% Private Pay and Other 25% 24% 25% Total 100% 100% 100% We attempt to attract an increased percentage of Medicare and private pay patients by providing rehabilitative and other post–acute care services.
The following table sets forth sources of net patient revenues for the periods indicated: Year Ended December 31, Source 2023 2022 2021 Medicare 34% 37% 36% Managed Care 10% 10% 11% Medicaid 30% 28% 29% Private Pay and Other 26% 25% 24% Total 100% 100% 100% We attempt to attract an increased percentage of Medicare and private pay patients by providing rehabilitative and other post–acute care services.
The CARES Act appropriated $178 billion to the Public Health and Social Services Emergency Fund, which is referred to as the Provider Relief Fund ("PRF"). The Company recorded $11,457,000, $63,360,000 and $47,505,000 of government stimulus income from the PRF for the years ended December 31, 2022, 2021, and 2020, respectively. Non – Operating Income.
The CARES Act appropriated $178 billion to the Public Health and Social Services Emergency Fund, which is referred to as the Provider Relief Fund ("PRF"). The Company recorded $0, $11,457,000 and $63,360,000 of government stimulus income from the PRF for the years ended December 31, 2023, 2022, and 2021, respectively. Non – Operating Income.
We provide hospice care through Caris Healthcare, L.P. (“Caris”), a wholly owned subsidiary of NHC. Caris specializes in providing hospice and palliative care to over 1,280 patients per day in 29 locations in Georgia, Missouri, South Carolina, Tennessee, and Virginia.
We provide hospice care through Caris Healthcare, L.P. (“Caris”), a wholly owned subsidiary of NHC. Caris specializes in providing hospice and palliative care to over 1,268 patients per day in 30 locations in Georgia, Missouri, South Carolina, Tennessee, and Virginia.
Our development goal is to link our skilled nursing facilities with our senior living communities, home health and hospice operations, and behavioral health hospitals; therefore, obtaining a competitive advantage for our operations. Human Capital Employees As of December 31, 2022, we had 12,355 full-time and part-time employees (“partners”) through our Administrative Services Contractor (National Health Corporation).
Our development goal is to link our skilled nursing facilities with our senior living communities, home health and hospice operations, and behavioral health hospitals; therefore, obtaining a competitive advantage for our operations. Human Capital Employees As of December 31, 2023, we had 13,123 full-time and part-time employees (“partners”) through our Administrative Services Contractor (National Health Corporation).
These units are rented by the month; thus, these facilities offer an expansion of our continuum of care. We believe these independent living units offer a positive marketing aspect to all our senior care offerings and services. In 2022, the rate of occupancy was 89.0% compared to 88.1% in 2021.
These units are rented by the month; thus, these facilities offer an expansion of our continuum of care. We believe these independent living units offer a positive marketing aspect to all our senior care offerings and services. In 2023 and 2022, the rate of occupancy was 89.0%.
The FY2023 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 FY2023 is $32,487. 8 Table of Contents Medicaid Legislation and Regulations Skilled Nursing Facilities State Medicaid plans subject to budget constraints are of particular concern to us.
The FY2024 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 FY2024 is $33,494. 8 Table of Contents Medicaid Legislation and Regulations Skilled Nursing Facilities State Medicaid plans subject to budget constraints are of particular concern to us.
For the years ended December 31, 2022, 2021 and 2020, we have recorded $19,442,000, $20,482,000 and $26,179,000, respectively, due to these supplemental Medicaid payments. We have recorded these payments in net patient revenues in our consolidated statements of operations.
For the years ended December 31, 2023, 2022 and 2021, we have recorded $20,214,000, $19,442,000 and $20,482,000, respectively, due to these supplemental Medicaid payments. We have recorded these payments in net patient revenues in our consolidated statements of operations.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of December 31, 2022: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 68 Number of 4 and 5-star rated skilled nursing facilities 42 Percentage of 4 and 5-star rated skilled nursing facilities 62% 37% Average rating for all skilled nursing facilities, end of period 3.8 2.9 Development and Growth We are undertaking to expand our post–acute and senior health care operations while protecting our existing operations and markets.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of December 31, 2023: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 68 Number of 4 and 5-star rated skilled nursing facilities 40 Percentage of 4 and 5-star rated skilled nursing facilities 59% 36% Average rating for all skilled nursing facilities, end of period 3.6 2.9 Development and Growth We are undertaking to expand our post–acute and senior health care operations while protecting our existing operations and markets.
We estimate the resulting increase in revenue for the 2023 fiscal year will be approximately $3,200,000 annually, or $800,000 per quarter. Effective October 1, 2022 and for the fiscal year 2023, the state of South Carolina 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. Effective October 1, 2023 and for the fiscal year 2024, the state of South Carolina implemented specific individual nursing facility increases.
We perform resident assessments to determine what services are desired or required and our qualified staff encourages residents to participate in a range of activities. In 2022, the rate of occupancy was 71.6% compared to 68.2% in 2021.
We perform resident assessments to determine what services are desired or required and our qualified staff encourages residents to participate in a range of activities. In 2023, the rate of occupancy was 78.5% compared to 71.6% in 2022.
Under the Medicare reimbursement payment system, we receive a prospectively determined amount per patient per 30-day period of care. Under our managed care contracts, we may receive a period of care payment or be paid by a per-visit payment model. In 2022, we served an average census of 3,036 patients and provided 315,643 visits. ● Hospice Agencies .
Under the Medicare reimbursement payment system, we receive a prospectively determined amount per patient per 30-day period of care. Under our managed care contracts, we may receive a period of care payment or be paid by a per-visit payment model. In 2023, we served an average census of 3,321 patients and provided 309,929 visits. ● Hospice Agencies .
The significant sources of our other revenues are described as follows: ● Management, Accounting and Financial Services. We provide management services to skilled nursing facilities, assisted living facilities and independent living facilities operated by third party operators. We typically charge 6% of the managed centers’ net operating revenues as a fee for these services.
We provide management services to skilled nursing facilities, assisted living facilities and independent living facilities operated by third party operators. We typically charge 6% of the managed centers’ net operating revenues as a fee for these services. Additionally, we provide accounting and financial services to other healthcare operators.
The payment under the Medicare program is also adjusted for certain variables. In October 2022, CMS released its final rule outlining fiscal year 2023 Medicare payment rates. CMS projects payments to home health agencies in fiscal year 2023 will increase in aggregate by 0.7%, or $125 million.
The payment under the Medicare program is also adjusted for certain variables. In November 2023, CMS released its final rule outlining fiscal year 2024 Medicare payment rates. CMS projects payments to home health agencies in fiscal year 2024 will increase in aggregate by 0.8%, or $140 million.
The services we provide include a comprehensive range of health care services. In fiscal 2022, 95.8% of our net operating revenues and grant income were derived from such health care services. Highlights of health care services activities during 2022 were as follows: ● Skilled Nursing Facilities.
The services we provide include a comprehensive range of health care services. In fiscal 2023, 95.3% of our net operating revenues were derived from such health care services. Highlights of health care services activities during 2023 were as follows: ● Skilled Nursing Facilities.
In July 2022, CMS released its final rule outlining fiscal year 2023 Medicare payment rates. CMS issued a rate increase of 3.8%, or $825 million, effective October 1, 2022. The increase is the result of a 4.1% inpatient hospital market basket increase reduced by a 0.3% productivity adjustment.
In July 2023, CMS released its final rule outlining fiscal year 2024 Medicare payment rates. CMS issued a rate increase of 3.1%, or $780 million, effective October 1, 2023. This increase is the result of a 3.3% market basket increase reduced by a 0.2% productivity adjustment.
The following are the four levels of care provided under the hospice benefit: ● Routine Home Care . Care that is not classified under any of the other levels of care, such as the work of nurses, social workers or home health aides. ● General Inpatient Care .
Care that is not classified under any of the other levels of care, such as the work of nurses, social workers or home health aides. ● General Inpatient Care .
Additionally, we provide accounting and financial services to other healthcare operators. As of December 31, 2022, we perform management services for thirteen healthcare facilities and accounting and financial services for 19 healthcare facilities. ● Insurance Services. NHC owns a Tennessee domiciled insurance company that provides workers’ compensation coverage to substantially all of NHC's owned and managed healthcare facilities.
As of December 31, 2023, we perform management services for eleven healthcare facilities and accounting and financial services for 16 healthcare facilities. ● Insurance Services. NHC owns a Tennessee domiciled insurance company that provides workers’ compensation coverage to substantially all of NHC's owned, leased and managed healthcare facilities.
We generate revenues from management, accounting and financial services to third party operators of healthcare facilities, from insurance services to our managed healthcare facilities, and from rental income. In fiscal 2022, 4.2% of our net operating revenues and grant income were derived from such sources.
We generate revenues from management, accounting and financial services to third party operators of healthcare facilities, from insurance services to our managed healthcare facilities, and from rental income. In fiscal 2023, 4.7% of our net operating revenues were derived from such sources. The significant sources of our other revenues are described as follows: ● Management, Accounting and Financial Services.
Type of Operation Description Size Location Placed in Service Skilled Nursing Acquisition 166 beds Knoxville, TN February 2020 Assisted Living Bed Addition 20 beds Gallatin, TN September 2020 Skilled Nursing Bed Addition 30 beds Kingsport, TN December 2020 Hospice Acquisition 28 agencies Various June 2021 Homecare New Agency 1 agency Anderson, SC January 2022 Hospice New Agency 1 agency Tullahoma, TN March 2022 Behavioral Health Hospital New Facility 64 beds Knoxville, TN April 2022 Behavioral Health Hospital New Facility 16 beds St.
Type of Operation Description Size Location Placed in Service Hospice Acquisition 28 agencies Various June 2021 Homecare New Agency 1 agency Anderson, SC January 2022 Hospice New Agency 1 agency Tullahoma, TN March 2022 Behavioral Health Hospital New Facility 64 beds Knoxville, TN April 2022 Behavioral Health Hospital New Facility 16 beds St.
Description of the Business The following table summarizes our operations by ownership status as of December 31, 2022: Owned Leased Managed Total Skilled Nursing Facilities Number of facilities 27 32 9 68 Percentage of total 39.7% 47.1% 13.2% 100.0% Licensed beds 3,460 4,221 1,045 8,726 Percentage of total 39.6% 48.4% 12.0% 100.0% Assisted Living Facilities Number of facilities 13 7 3 23 Percentage of total 56.5% 30.5% 13.0% 100.0% Units 964 174 43 1,181 Percentage of total 81.6% 14.7% 3.7% 100.0% Independent Living Facilities Number of facilities 1 3 1 5 Percentage of total 20.0% 60.0% 20.0% 100.0% Retirement apartments 93 245 137 475 Percentage of total 19.6% 51.6% 28.8% 100.0% Behavioral Health Hospitals Number of facilities 3 – – 3 Percentage of total 100.0% – – 100.0% Licensed beds 96 – – 96 Percentage of total 100.0% – – 100.0% Homecare Agencies 35 – – 35 Hospice Agencies 29 – – 29 2 Table of Contents Net Patient Revenues.
Description of the Business The following table summarizes our operations by ownership status as of December 31, 2023: Owned Leased Managed Total Skilled Nursing Facilities Number of facilities 28 32 8 68 Percentage of total 41.2% 47.0% 11.8% 100.0% Licensed beds 3,526 4,227 979 8,732 Percentage of total 40.4% 48.4% 11.2% 100.0% Assisted Living Facilities Number of facilities 17 7 2 26 Percentage of total 65.4% 26.9% 7.7% 100.0% Units 1,293 174 34 1,501 Percentage of total 86.1% 11.6% 2.3% 100.0% Independent Living Facilities Number of facilities 1 3 1 5 Percentage of total 20.0% 60.0% 20.0% 100.0% Retirement apartments 93 245 137 475 Percentage of total 19.6% 51.6% 28.8% 100.0% Behavioral Health Hospitals Number of facilities 3 – – 3 Percentage of total 100.0% – – 100.0% Licensed beds 96 – – 96 Percentage of total 100.0% – – 100.0% Homecare Agencies 35 – – 35 Hospice Agencies 30 – – 30 2 Table of Contents Net Patient Revenues.
We closely followed the recommendations of the World Health Organization, the U.S. Centers for Disease Control and local governments, and we took action to ensure our partners were safe.
We closely followed the recommendations of the World Health Organization, the U.S. Centers for Disease Control and local governments, and we took action to ensure our partners were safe. Community We have a long and proud history of investing in the communities where we live and work.
Hospice Medicare payment rates are calculated as daily rates for each of four levels of care we deliver. Rates are set based on specific levels of care, are adjusted by a wage index to reflect healthcare labor costs across the country and are established annually through federal legislation.
Rates are set based on specific levels of care, are adjusted by a wage index to reflect healthcare labor costs across the country and are established annually through federal legislation. The following are the four levels of care provided under the hospice benefit: ● Routine Home Care .
A significant goal of the federal health care system is to transform the delivery of health care by holding providers accountable for the cost and quality of care provided, Medicare and many commercial third-party payors are implementing Accountable Care Organization ("ACO") models in which groups of providers share in the benefit and risk of providing care to an assigned group of individuals.
Medicare and many commercial third-party payors are implementing Accountable Care Organization ("ACO") models in which groups of providers share in the benefit and risk of providing care to an assigned group of individuals.
The recalibrated parity adjustment is a total of 4.6% and is being phased in over the next two years (2.3% annually). The Coronavirus Aid, Relief and Economic Security Act (the “CARES” Act) and other subsequent Congressional actions temporarily suspended Medicare sequestration beginning May 1, 2020 through March 31, 2022. The Medicare sequestration policy reduces fee-for-service Medicare payments by 2 percent.
The Coronavirus Aid, Relief and Economic Security Act (the “CARES” Act) and other subsequent Congressional actions temporarily suspended Medicare sequestration beginning May 1, 2020 through March 31, 2022. The Medicare sequestration policy reduces fee-for-service Medicare payments by 2 percent.
Although payment rates vary among these sources, market forces and costs largely determine these rates. Private paying patients, private insurance carriers and the Veterans Administration generally pay based on the center's charges or specifically negotiated contracts.
Although payment rates vary among these sources, market forces and costs largely determine these rates. Private paying patients, private insurance carriers and the Veterans Administration generally pay based on the center's charges or specifically negotiated contracts. We contract with managed care organizations ("MCO's") and insurance carriers for the provision of healthcare services by our owned, leased and managed healthcare facilities.
We estimate the resulting increase in revenue for the 2023 fiscal year will be approximately $3,735,000 annually, or $934,000 per quarter. We have also received from many of the states in which we operate a supplemental Medicaid payment to help mitigate the incremental costs resulting from the COVID-19 public health emergency.
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. 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.
Community We have a long and proud history of investing in the communities where we live and work. Through the National Health Foundation (the “Foundation”) and The Foundation for Geriatric Education (“TFGE”) we give back by providing grants to nonprofits and providing tuition reimbursement to partners to further their education in the field of geriatrics.
Through the National Health Foundation (the “Foundation”) and The Foundation for Geriatric Education (“TFGE”) we give back by providing grants to nonprofits and providing tuition reimbursement to partners to further their education in the field of geriatrics. We also have a Compassion Fund which is used to help support partners in times of need.
We are committed to adhering to applicable federal, state and local environmental regulations. Our goal is to minimize environmental risks to our patients and in the communities which we operate. Through recycling programs, we are working to reduce the amount of waste sent to landfills. Our electronic waste is recycled through a zero-landfill recycling company.
Through recycling programs, we are working to reduce the amount of waste sent to landfills. Our electronic waste is recycled through a zero-landfill recycling company.
Environmental Sustainability We are working diligently to minimize our effect on the environment by conserving energy and protecting our natural resources. We are focusing on being more energy efficient and reducing our water use and wastewater discharges while continuing to provide a healthy environment for our patients, partners and visitors.
We are focusing on being more energy efficient and reducing our water use and wastewater discharges while continuing to provide a healthy environment for our patients, partners and visitors. We are committed to adhering to applicable federal, state and local environmental regulations. Our goal is to minimize environmental risks to our patients and in the communities which we operate.
We also have a Compassion Fund which is used to help support partners in times of need. Many of our partners make a positive impact in the communities in which they live by donating their time and talent by volunteering and serving on boards of charitable organizations.
Many of our partners make a positive impact in the communities in which they live by donating their time and talent by volunteering and serving on boards of charitable organizations. Environmental Sustainability We are working diligently to minimize our effect on the environment by conserving energy and protecting our natural resources.
If our skilled nursing facilities or home health and hospice agencies fail to comply with these directives or otherwise fail to comply substantially with licensure and certification laws, rules and regulations, we could lose our certification as a Medicare and Medicaid provider and/or lose our licenses.
These notices may require us to take corrective action and may impose civil money penalties and/or other operating restrictions. If our healthcare operations fail to comply with these directives or otherwise fail to comply substantially with licensure and certification laws, rules and regulations, we could lose our certification as a Medicare and Medicaid provider and/or lose our licenses.
We contract with over 60 managed care organizations ("MCO's") and insurance carriers for the provision of healthcare services by our owned and managed healthcare facilities. Government Regulation General Health care is an area of extensive regulatory oversight and frequent regulatory change. The federal government and the states in which we operate regulate various aspects of our business.
Government Regulation General Health care is an area of extensive regulatory oversight and frequent regulatory change. The federal government and the states in which we operate regulate various aspects of our business. These regulatory bodies, among other things, require us annually to license our skilled nursing facilities and other health care businesses.
We generally charge 6% of facility net operating revenues for our management services. The following table shows the occupancy rates for our owned and leased skilled nursing facilities: Year Ended December 31, 2022 2021 2020 Overall census 83.8% 80.6% 83.6% ● Rehabilitative Services.
We generally charge 6% of facility net operating revenues for our management services. The following table shows the occupancy percentages for our owned and leased skilled nursing facilities. We define occupancy percentage as the ratio of actual patient days during any measurement period to the number of operational beds in a facility.
The fiscal year 2023 rule provided for an approximate 2.7% increase, or $904 million, compared to 2022 levels. The net increase includes a 3.9% market-basket increase plus a 1.5% market basket forecast error adjustment, less a 0.3% productivity adjustment and a 2.3% decrease in the FY 2023 SNF PPS rates as a result of the recalibrated parity adjustment.
The rule includes a 3.0% market basket rate increase, a 3.6% market basket forecast error adjustment, less a 0.2% productivity adjustment, as well as a negative 2.3%, or approximately $789 million, decrease in 2024 SNF Payment Prospective Systems rates as a result of the second phase of the Patient Driven Payment Model parity adjustment recalibration.
Removed
These regulatory bodies, among other things, require us annually to license our skilled nursing facilities and other health care businesses.
Added
The number of beds that are operational may be less than the licensed bed capacity. The reduction of operational beds compared to licensed beds occurs for a variety of reasons, some of which include conforming to government requirements, improving operational efficiencies, or enhancing the patient experience.
Removed
These notices may require us to take corrective action and may impose civil money penalties and/or other operating restrictions.
Added
We believe reporting occupancy based on operational beds is consistent with industry practice and provides a more meaningful measure of performance. Year Ended December 31, 2023 2022 2021 Overall census 87.9% 83.8% 80.6% ● Rehabilitative Services.
Removed
The increase reflects the effects of the home health payment update percentage of 4.0%, a permanent behavioral assumption adjustment resulting in a decrease of 3.5%, and an estimated 0.2% increase that reflects the effects of an update to the fixed-dollar loss ratio used in determining outlier payments.
Added
A significant goal of the federal health care system is to transform the delivery of health care by holding providers accountable for the cost and quality of care provided.
Removed
Some of the preventative measure we have implemented included: ● increased hygiene, cleaning and sanitizing procedures at all locations; ● provided additional personal protective equipment to partners; ● restricted travel and encouraged quarantine upon return; ● encouraged employees to take time off for illness; ● established strict protocols and screening for outside guests; and ● enabled partners to work from home where possible.
Added
The fiscal year 2024 rule equates to a net increase of 4.0%, or approximately $1.4 billion, in Medicare Part A payments to SNFs in fiscal year 2024 compared to 2023 levels.
Added
The increase is the result of a 3.3% market basket update, reduced by a 0.3% productivity adjustment. The increase is offset by a behavioral adjustment that will cut payments by a net 2.6%. The behavioral adjustment was designed to achieve budget-neutral implementation of the PDPM.
Added
Finally, CMS also adjusted the fixed-dollar loss ratio for outlier payments, which will increase payments by 0.4%. Hospice Medicare payment rates are calculated as daily rates for each of four levels of care we deliver.
Added
We estimate the resulting increase in revenue for the 2024 fiscal year will be approximately $9,000,000 annually, or $2,250,000 per quarter. Effective July 1, 2023 and for the fiscal year 2024, the state of Missouri implemented specific individual nursing facility increases.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

10 edited+5 added−17 removed181 unchanged
Biggest changeA breach or attack, including those caused by updates and other releases, affecting any of these third parties could harm our business. In addition, the COVID-19 pandemic may have an adverse impact on our information technology systems and our ability to securely preserve confidential information, including risks associated with telecommuting issues when our employees work remotely.
Biggest changeA breach or attack, including those caused by updates and other releases, affecting any of these third parties could harm our business.
The COVID-19 impacts may include, but would not be limited to: ● Disruption to operations due to the unavailability of partners due to illness, quarantines, risk of illness, travel restrictions or factors that limit our existing or potential workforce. ● Increased costs and staffing requirements related to additional CDC protocols, federal and state workforce protection and related isolation procedures, including obligations to test patients and staff for COVID-19. ● Decreased availability and increased cost of supplies due to increased demand around essential personal protective equipment (“PPE”), sanitizers and cleaning supplies including disinfecting agents, and food and food-related products due to increased global demand and disruptions along the global supply chains of these manufactures and distributors. ● Decreased census across all our operations, which could negatively impact our operating cash flows and financial condition. ● Elevated partner turnover which may increase payroll expense, increase third party agency nurse staffing, and recruiting-related expenses. ● Increased risk of litigation and related liabilities arising in connection with patient or partner illness, hospitalization and/or death. ● Significant disruption of the global financial markets, which could have a negative impact on our ability to access capital in the future.
The impacts may include, but would not be limited to: ● Disruption to operations due to the unavailability of partners due to illness, quarantines, risk of illness, travel restrictions or factors that limit our existing or potential workforce. ● Increased costs and staffing requirements related to additional CDC protocols, federal and state workforce protection and related isolation procedures, including obligations to test patients and staff. ● Decreased availability and increased cost of supplies due to increased demand around essential personal protective equipment (“PPE”), sanitizers and cleaning supplies including disinfecting agents, and food and food-related products due to increased global demand and disruptions along the global supply chains of these manufactures and distributors. ● Decreased census across all our operations, which could negatively impact our operating cash flows and financial condition. ● Elevated partner turnover which may increase payroll expense, increase third party agency nurse staffing, and recruiting-related expenses. ● Increased risk of litigation and related liabilities arising in connection with patient or partner illness, hospitalization and/or death. ● Significant disruption of the global financial markets, which could have a negative impact on our ability to access capital in the future.
In the ordinary course of our business, we are regularly subject to inquiries, investigations and audits by federal and state agencies to determine whether we are in compliance with regulations governing the operation of, and reimbursement for, skilled nursing facilities and nursing homes, assisted living and independent living facilities, hospice, home health agencies and our other operating areas.
In the ordinary course of our business, we are regularly subject to inquiries, investigations and audits by federal and state agencies to determine whether we are in compliance with regulations governing the operation of, and reimbursement for, skilled nursing facilities and nursing homes, assisted living and independent living facilities, hospice, home health agencies, behavioral health hospitals, and our other operating areas.
Such developments may include the ongoing geographic spread of the virus, the severity and the duration of the pandemic, the timing, availability and effectiveness of medical treatments and vaccines (including additional doses of vaccines), the impact of any mutations of the virus, and the type, duration and efficacy of actions that may be taken by various governmental authorities to contain the virus or treat its impact, among others.
Such developments may include the ongoing geographic spread of the virus, the timing, availability and effectiveness of medical treatments and vaccines (including additional doses of vaccines), the impact of any mutations of the virus, and the type, duration and efficacy of actions that may be taken by various governmental authorities to contain the virus or treat its impact, among others.
Risks Relating to Our Operations COVID-19 and other pandemics, epidemics, or outbreaks of a contagious illness may adversely affect our operating results, cash flows and financial condition. The COVID-19 pandemic has had a negative impact and is expected to continue to have a negative impact on our business and results of operations.
Risks Relating to Our Operations COVID-19 and other pandemics, epidemics, or outbreaks of a contagious illness may adversely affect our operating results, cash flows and financial condition. The COVID-19 pandemic had a negative impact on our business and results of operations.
Some of the factors are beyond our control and a change in any such factor could affect our ability to pay or maintain dividends. The failure to pay or maintain dividends could adversely affect our stock price.
Some of the factors are beyond our control and a change in any such factor could affect our ability to pay or maintain dividends. The failure to pay or maintain dividends could adversely affect our stock price. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Upkeep of healthcare properties is capital intensive, requiring us to continually direct financial resources to the maintenance and enhancement of our physical plant and equipment. As of December 31, 2022, we leased or owned 59 skilled nursing facilities, 20 assisted living facilities, and four independent living facilities.
Upkeep of healthcare properties is capital intensive, requiring us to continually direct financial resources to the maintenance and enhancement of our physical plant and equipment. As of December 31, 2023, we leased or owned 60 skilled nursing facilities, 24 assisted living facilities, 3 behavioral health hospitals, and four independent living facilities.
Aggressive anti–fraud actions have had and could have an adverse effect on our financial position, results of operations and cash flows. See Item 1, "Business – Government Regulation".
Aggressive anti–fraud actions have had and could have an adverse effect on our financial position, results of operations and cash flows.
Congress and certain state legislatures have considered and passed a large number of laws intended to result in significant changes to the healthcare industry, including the ACA.
Our business may be impacted by healthcare reform efforts. In recent years, the U.S. Congress and certain state legislatures have considered and passed a large number of laws intended to result in significant changes to the healthcare industry, including the ACA.
We cannot assure you that governmental officials charged with responsibility for enforcing the provisions of these laws and regulations will not assert that one or more of our arrangements are in violation of the provisions of such laws and regulations. The regulatory environment surrounding the post–acute and long–term care industry has intensified, particularly for larger for–profit, multi–facility providers like us.
These laws and regulations are complex and limited judicial or regulatory interpretation exists. We cannot assure you that governmental officials charged with responsibility for enforcing the provisions of these laws and regulations will not assert that one or more of our arrangements are in violation of the provisions of such laws and regulations.
Removed
Although vaccines for the COVID-19 virus are widely available in the United States, COVID-19 cases remain high in some areas. According to the Centers for Disease Control and Prevention, older adults and people with certain underlying medical conditions are at higher risk for serious illness and death from COVID-19.
Added
The regulatory environment surrounding the post–acute and long–term care industry has intensified, particularly for larger for–profit, multi–facility providers like us.
Removed
The overall and RN staffing ratings are set to one star for nursing homes that report four or more days in the quarter with no RN on-site. Finally, staffing ratings are not suppressed for nursing homes that have five or more days with residents and no nurse staffing hours reported.
Added
See Item 1, "Business – Government Regulation". 16 Table of Contents We face uncertainty related to the COVID-19 public health emergency's ("PHE") expiration and wind-down, which could have a material adverse affect on our business, financial condition, results of operations and cash flows.
Removed
Even if, during an investigation, the court partially unseals a complaint to allow the government and a defendant to work toward a resolution of the complaint's allegations, the defendant is prohibited from revealing to anyone the existence of the complaint or that the partial unsealing has occurred. These laws and regulations are complex and limited judicial or regulatory interpretation exists.
Added
The extent to which the COVID-19 PHE's termination will affect our operations will depend on future developments, which are highly uncertain and cannot be predicted.
Removed
We are unable to predict the ultimate impact of COVID-19 pandemic stimulus or relief legislation or the effect that such legislation or other government responses intended to assist healthcare providers in responding to the COVID-19 pandemic may have on our business, financial condition, results of operations, or cash flows.
Added
There remains uncertainty as to what changes will be made to the Health and Human Service’s emergency response requirements for our skilled nursing facilities and senior living facilities in order to better respond to the issues experienced during the COVID-19 PHE.
Removed
In response to the COVID-19 pandemic, federal and state governments have passed legislation, promulgated regulations and taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients and to provide financial relief to healthcare providers.
Added
To the extent COVID-19 is endemic in nature, we may face continued challenges from ongoing infection control and emergency preparedness requirements made part of state laws or regulations. Additionally, the long-term effects of the COVID-19 pandemic may include long-term decline in demand for care in skilled nursing facilities and senior living facilities.
Removed
Together, the CARES Act, the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCE Act”), the Consolidated Appropriations Act, 2021 (“CAA”) and the American Rescue Plan Act of 2021 authorized over $186 billion in funding to be distributed to health care providers through the Provider Relief Fund.
Removed
These funds were intended to reimburse eligible providers, including public entities and Medicare and/or Medicaid-enrolled providers and suppliers, for healthcare-related expenses or lost revenues attributable to COVID-19.
Removed
Recipients were not required to repay these funds, provided that they attest to and comply with certain terms and conditions, including not using Provider Relief Fund payments to reimburse expenses or losses that other sources are obligated to reimburse and submitting reports as required by HHS.
Removed
Recipients of Provider Relief Fund payments are subject to audit requirements, and we expect that recipients of funds from the Provider Relief Fund will be subject to significant scrutiny by the federal government.
Removed
We have structured our use of these funds in accordance with the terms and conditions, but federal regulators may disagree with our interpretation of these terms and conditions and require that we repay some or all amounts received at our facilities or impose other penalties. 16 Table of Contents Beyond financial assistance, federal and state governments have enacted legislation and established regulations intended to expand access to and payment for telehealth services, increase access to medical supplies and equipment, prioritize review of drug applications to help with shortages of emergency drugs, and ease various legal and regulatory burdens on health care providers.
Removed
HHS and CMS have announced other flexibilities for health care providers in response to COVID-19, such as relief from data submission requirements and measure suppression policies for providers participating in certain quality reporting programs. It is unclear how changes to these and other value-based programs will affect our financial condition.
Removed
There is still a high degree of uncertainty surrounding the implementation of the CARES Act and related legislation passed in response to the COVID-19 pandemic, and the pandemic continues to evolve.
Removed
Some of the measures allowing for flexibility in delivery of care and various financial supports for health care providers are available only for the duration of the national public health emergency (“PHE”) declared by HHS as a result of the pandemic.
Removed
The Biden administration announced on January 30, 2023 that the COVID-19 public health emergency is set to end on May 11, 2023. The federal government may consider additional stimulus and relief efforts, but we are unable to predict whether additional measures will be enacted or their impact.
Removed
There can be no assurance as to the total amount of financial and other types of assistance we will ultimately receive under stimulus and relief legislation, and it is difficult to predict the impact of such legislation on our operations.
Removed
Further, there can be no assurance that the terms and conditions of the Provider Relief Fund or other programs will not change in ways that affect funding we may receive, our ability to comply with such terms and conditions in the future or our eligibility to participate.
Removed
We continue to assess the potential impact of COVID-19 and government responses to the pandemic, including the enactment and implementation of the CARES Act and related legislation on our business, financial condition, results of operations and cash flows. Our business may be impacted by healthcare reform efforts. In recent years, the U.S.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLouis South Carolina Anderson Caris Healthcare – Anderson Bluffton Caris Healthcare – Bluffton Charleston Caris Healthcare – Charleston Columbia Caris Healthcare – Columbia Greenville Caris Healthcare – Greenville Greenwood Caris Healthcare – Greenwood Myrtle Beach Caris Healthcare – Myrtle Beach Sumter Caris Healthcare – Sumter Tennessee Athens Caris Healthcare – Athens Chattanooga Caris Healthcare – Chattanooga Columbia Caris Healthcare – Columbia Cookeville Caris Healthcare – Cookeville Crossville Caris Healthcare – Crossville Dickson Caris Healthcare – Dickson Greeneville Caris Healthcare – Greeneville Johnson City Caris Healthcare – Johnson City Knoxville Caris Healthcare – Knoxville Lenoir City Caris Healthcare – Lenoir City Milan Caris Healthcare – Milan Murfreesboro Caris Healthcare – Murfreesboro Nashville Caris Healthcare – Nashville Sevierville Caris Healthcare – Sevierville Somerville Caris Healthcare – Somerville Springfield Caris Healthcare – Springfield Tullahoma Caris Healthcare – Tullahoma Virginia Big Stone Gap Caris Healthcare – Big Stone Gap Bristol Caris Healthcare – Bristol Healthcare Facilities Leased to Others The following table includes certain information regarding healthcare facilities which are owned by us and leased to others: Name of Facility Location No. of Beds Skilled Nursing Facilities Solaris HealthCare North Naples Naples, FL 60 Solaris HealthCare Coconut Creek Coconut Creek, FL 120 Solaris HealthCare Daytona Daytona Beach, FL 73 Solaris HealthCare Imperial Naples, FL 113 Solaris HealthCare Windermere Orlando, FL 120 Solaris HealthCare Charlotte Harbor Port Charlotte, FL 180 The Health Center at Standifer Place Chattanooga, TN 444 Solaris HealthCare Lake City Lake City, FL 120 Solaris HealthCare Pensacola Pensacola, FL 180 Assisted Living No. of Units Solaris Senior Living Vero Beach Vero Beach, FL 135 Solaris Senior Living Merritt Island Merritt Island, FL 95 Solaris Senior Living Stuart Stuart, FL 100 Standifer Place Assisted Living Chattanooga, TN 74 (1) Leased from NHI (2) Knoxville Center for Behavioral Medicine is owned by separate limited liability companies.
Biggest changeLouis South Carolina Anderson Caris Healthcare – Anderson Bluffton Caris Healthcare – Bluffton Charleston Caris Healthcare – Charleston Columbia Caris Healthcare – Columbia Greenville Caris Healthcare – Greenville Greenwood Caris Healthcare – Greenwood Myrtle Beach Caris Healthcare – Myrtle Beach Sumter Caris Healthcare – Sumter Tennessee Athens Caris Healthcare – Athens Chattanooga Caris Healthcare – Chattanooga Columbia Caris Healthcare – Columbia Cookeville Caris Healthcare – Cookeville Crossville Caris Healthcare – Crossville Dickson Caris Healthcare – Dickson Greeneville Caris Healthcare – Greeneville Johnson City Caris Healthcare – Johnson City Knoxville Caris Healthcare – Knoxville Lenoir City Caris Healthcare – Lenoir City Milan Caris Healthcare – Milan Murfreesboro Caris Healthcare – Murfreesboro Nashville Caris Healthcare – Nashville Sevierville Caris Healthcare – Sevierville Somerville Caris Healthcare – Somerville Springfield Caris Healthcare – Springfield Tullahoma Caris Healthcare – Tullahoma Virginia Big Stone Gap Caris Healthcare – Big Stone Gap Bristol Caris Healthcare – Bristol Cedar Bluff Caris Healthcare – Cedar Bluff Healthcare Facilities Leased to Others The following table includes certain information regarding healthcare facilities which are owned by us and leased to others: Name of Facility Location No. of Beds Skilled Nursing Facilities Solaris HealthCare North Naples Naples, FL 60 Solaris HealthCare Coconut Creek Coconut Creek, FL 120 Solaris HealthCare Daytona Daytona Beach, FL 73 Solaris HealthCare Imperial Naples, FL 113 Solaris HealthCare Windermere Orlando, FL 120 Solaris HealthCare Charlotte Harbor Port Charlotte, FL 180 The Health Center at Standifer Place Chattanooga, TN 444 Solaris HealthCare Lake City Lake City, FL 120 Solaris HealthCare Pensacola Pensacola, FL 180 Assisted Living No. of Units Standifer Place Assisted Living Chattanooga, TN 74 (1)Leased from NHI (2) Knoxville Center for Behavioral Medicine is owned by separate limited liability companies.
Peters Memory Care Owned 60 South Carolina Bluffton The Palmettos of Bluffton Owned 78 Charleston The Palmettos of Charleston Owned 60 Columbia The Palmettos of Parklane Owned 75 Greenville The Palmettos of Mauldin Owned 45 Murrells Inlet The Palmettos of Garden City Owned 80 Tennessee Dickson NHC HealthCare, Dickson Leased (1) 20 Farragut NHC Place, Farragut Owned 84 Farragut NHC Place, Cavette Hill Owned 60 Franklin NHC Place, Cool Springs Owned 89 Gallatin NHC Place, Sumner Owned 80 Murfreesboro AdamsPlace Owned 106 Nashville Lakeshore Heartland Managed 9 Nashville Lakeshore, The Meadows Managed 10 Nashville Richland Place Managed 24 Nashville The Place at the Trace Owned 80 Smithville NHC HealthCare, Smithville Leased (1) 6 Somerville NHC HealthCare, Somerville Leased (1) 6 23 Table of Contents Retirement Apartments State City Retirement Apartments Affiliation Units Missouri St.
Peters Memory Care Owned 60 South Carolina Bluffton The Palmettos of Bluffton Owned 78 Charleston The Palmettos of Charleston Owned 60 Columbia The Palmettos of Parklane Owned 75 Greenville The Palmettos of Mauldin Owned 45 Murrells Inlet The Palmettos of Garden City Owned 80 Tennessee Dickson NHC HealthCare, Dickson Leased (1) 20 Farragut NHC Place, Farragut Owned 84 Farragut NHC Place, Cavette Hill Owned 60 Franklin NHC Place, Cool Springs Owned 89 Gallatin NHC Place, Sumner Owned 80 Murfreesboro AdamsPlace Owned 106 Nashville Lakeshore Heartland Owned 9 Nashville Lakeshore, The Meadows Managed 10 Nashville Richland Place Managed 24 Nashville The Place at the Trace Owned 80 Smithville NHC HealthCare, Smithville Leased(1) 6 Somerville NHC HealthCare, Somerville Leased(1) 6 23 Table of Contents Retirement Apartments State City Retirement Apartments Affiliation Units Missouri St.
Peters Leased 130 Springfield Springfield Rehabilitation and Health Care Center Leased 146 West Plains NHC HealthCare, West Plains Owned 114 South Carolina Anderson NHC HealthCare, Anderson Leased (1) 290 Bluffton NHC HealthCare, Bluffton Owned 120 Charleston NHC HealthCare, Charleston Owned 132 Clinton NHC HealthCare, Clinton Owned 131 Columbia NHC HealthCare, Parklane Owned 180 Greenwood NHC HealthCare, Greenwood Leased (1) 152 Greenville NHC HealthCare, Greenville Owned 176 Laurens NHC HealthCare, Laurens Leased (1) 176 Lexington NHC HealthCare, Lexington Owned 170 Mauldin NHC HealthCare, Mauldin Owned 180 Murrells Inlet NHC HealthCare, Garden City Owned 148 North Augusta NHC HealthCare, North Augusta Owned 192 Sumter NHC HealthCare, Sumter Managed 138 Tennessee Athens NHC HealthCare, Athens Leased (1) 86 Chattanooga NHC HealthCare, Chattanooga Leased (1) 200 Columbia NHC HealthCare, Columbia Owned 106 Columbia NHC-Maury Regional Transitional Care Center Owned 112 Cookeville NHC HealthCare, Cookeville Managed 104 Dickson NHC HealthCare, Dickson Leased (1) 191 Dunlap NHC HealthCare, Sequatchie Leased (1) 110 Farragut NHC HealthCare, Farragut Owned 106 Franklin NHC Place, Cool Springs Owned 180 Franklin NHC HealthCare, Franklin Leased (1) 80 Gallatin NHC Place, Sumner Owned 92 Hendersonville NHC HealthCare, Hendersonville Leased (1) 122 Johnson City NHC HealthCare, Johnson City Leased (1) 167 Kingsport NHC HealthCare, Kingsport Owned 90 Knoxville NHC HealthCare, Fort Sanders Owned 166 Knoxville Holston Health & Rehabilitation Center Owned 94 Knoxville NHC HealthCare, Knoxville Owned 127 Lawrenceburg NHC HealthCare, Lawrenceburg Managed 96 Lawrenceburg NHC HealthCare, Scott Leased (1) 60 Lewisburg NHC HealthCare, Lewisburg Leased (1) 100 Lewisburg NHC HealthCare, Oakwood Leased (1) 60 McMinnville NHC HealthCare, McMinnville Leased (1) 115 Milan NHC HealthCare, Milan Leased (1) 117 Murfreesboro AdamsPlace Owned 90 Murfreesboro NHC HealthCare, Murfreesboro Managed 181 Nashville Lakeshore, Heartland Managed 66 Nashville Lakeshore, The Meadows Managed 113 Nashville The Health Center of Richland Place Managed 107 Nashville NHC Place at The Trace Owned 90 Nashville West Meade Place Managed 120 Oak Ridge NHC HealthCare, Oak Ridge Managed 120 Pulaski NHC HealthCare, Pulaski Leased (1) 102 Smithville NHC HealthCare, Smithville Leased (1) 114 Somerville NHC HealthCare, Somerville Leased (1) 72 Sparta NHC HealthCare, Sparta Leased (1) 90 Springfield NHC HealthCare, Springfield Owned 107 Tullahoma NHC HealthCare, Tullahoma Owned 90 Virginia Bristol NHC HealthCare, Bristol Leased (1) 120 22 Table of Contents Behavioral Health Hospitals State City Center Name Affiliation Licensed Beds Missouri Maryland Heights Maryland Heights Center for Behavioral Health Owned 16 Osage Beach Osage Beach Center for Cognitive Disorders Owned 16 Tennessee Knoxville Knoxville Center for Behavioral Medicine Owned (2) 64 Assisted Living Units State City Center Name Affiliation Units Alabama Anniston NHC Place/Anniston Owned 67 Kentucky Glasgow NHC HealthCare, Glasgow Leased (1) 12 Missouri St.
Peters Leased 130 Springfield Springfield Rehabilitation and Health Care Center Leased 146 West Plains NHC HealthCare, West Plains Owned 114 South Carolina Anderson NHC HealthCare, Anderson Leased (1) 290 Bluffton NHC HealthCare, Bluffton Owned 120 Charleston NHC HealthCare, Charleston Owned 132 Clinton NHC HealthCare, Clinton Owned 131 Columbia NHC HealthCare, Parklane Owned 180 Greenwood NHC HealthCare, Greenwood Leased (1) 152 Greenville NHC HealthCare, Greenville Owned 176 Laurens NHC HealthCare, Laurens Leased (1) 176 Lexington NHC HealthCare, Lexington Owned 170 Mauldin NHC HealthCare, Mauldin Owned 180 Murrells Inlet NHC HealthCare, Garden City Owned 148 North Augusta NHC HealthCare, North Augusta Owned 192 Sumter NHC HealthCare, Sumter Managed 138 Tennessee Athens NHC HealthCare, Athens Leased (1) 86 Chattanooga NHC HealthCare, Chattanooga Leased (1) 200 Columbia NHC HealthCare, Columbia Owned 106 Columbia NHC-Maury Regional Transitional Care Center Owned 112 Cookeville NHC HealthCare, Cookeville Managed 104 Dickson NHC HealthCare, Dickson Leased (1) 191 Dunlap NHC HealthCare, Sequatchie Leased (1) 110 Farragut NHC HealthCare, Farragut Owned 106 Franklin NHC Place, Cool Springs Owned 180 Franklin NHC HealthCare, Franklin Leased (1) 80 Gallatin NHC Place, Sumner Owned 92 Hendersonville NHC HealthCare, Hendersonville Leased (1) 122 Johnson City NHC HealthCare, Johnson City Leased (1) 167 Kingsport NHC HealthCare, Kingsport Owned 90 Knoxville NHC HealthCare, Fort Sanders Owned 166 Knoxville Holston Health & Rehabilitation Center Owned 94 Knoxville NHC HealthCare, Knoxville Owned 127 Lawrenceburg NHC HealthCare, Lawrenceburg Managed 96 Lawrenceburg NHC HealthCare, Scott Leased (1) 60 Lewisburg NHC HealthCare, Lewisburg Leased (1) 100 Lewisburg NHC HealthCare, Oakwood Leased (1) 60 McMinnville NHC HealthCare, McMinnville Leased (1) 115 Milan NHC HealthCare, Milan Leased (1) 117 Murfreesboro AdamsPlace Owned 90 Murfreesboro NHC HealthCare, Murfreesboro Managed 181 Nashville Lakeshore, Heartland Owned 66 Nashville Lakeshore, The Meadows Managed 113 Nashville The Health Center of Richland Place Managed 107 Nashville NHC Place at The Trace Owned 90 Nashville West Meade Place Managed 120 Oak Ridge NHC HealthCare, Oak Ridge Managed 120 Pulaski NHC HealthCare, Pulaski Leased (1) 102 Smithville NHC HealthCare, Smithville Leased (1) 114 Somerville NHC HealthCare, Somerville Leased (1) 72 Sparta NHC HealthCare, Sparta Leased (1) 96 Springfield NHC HealthCare, Springfield Owned 107 Tullahoma NHC HealthCare, Tullahoma Owned 90 Virginia Bristol NHC HealthCare, Bristol Leased (1) 120 22 Table of Contents Behavioral Health Hospitals State City Center Name Affiliation Licensed Beds Missouri Maryland Heights Maryland Heights Center for Behavioral Health Owned 16 Osage Beach Osage Beach Center for Cognitive Disorders Owned 16 Tennessee Knoxville Knoxville Center for Behavioral Medicine Owned (2) 64 Assisted Living Units State City Center Name Affiliation Units Alabama Anniston NHC Place/Anniston Owned 67 Kentucky Glasgow NHC HealthCare, Glasgow Leased (1) 12 Florida Merritt Island Sodalis Senior Living Merritt Island Owned 95 Stuart Sodalis Senior Living Stuart Owned 96 Vero Beach Sodalis Senior Living Vero Beach Owned 129 Missouri St.
Joe Quincy NHC HomeCare of Quincy Vero Beach NHC HomeCare of Vero Beach South Carolina Aiken NHC HomeCare of Aiken Anderson NHC HomeCare of Anderson Bluffton NHC HomeCare of Beaufort Greenville NHC HomeCare of Greenville Greenwood NHC HomeCare of Greenwood Laurens NHC HomeCare of Laurens Murrells Inlet NHC HomeCare of Murrells Inlet Summerville NHC HomeCare of Low Country West Columbia NHC HomeCare of Midlands Tennessee Athens NHC HomeCare of Athens Chattanooga NHC HomeCare of Chattanooga Columbia NHC HomeCare of Columbia Cookeville NHC HomeCare of Cookeville Dickson NHC HomeCare of Dickson Franklin NHC HomeCare of Franklin Hendersonville NHC HomeCare of Hendersonville Johnson City NHC HomeCare of Johnson City Knoxville NHC HomeCare of Knoxville Lawrenceburg NHC HomeCare of Lawrenceburg Lewisburg NHC HomeCare of Lewisburg McMinnville NHC HomeCare of McMinnville Milan NHC HomeCare of Milan Murfreesboro NHC HomeCare of Murfreesboro Nashville Ascension at Home St.
Joe Quincy NHC HomeCare of Quincy Tallahassee NHC HomeCare of Tallahassee Vero Beach NHC HomeCare of Vero Beach South Carolina Aiken NHC HomeCare of Aiken Anderson NHC HomeCare of Anderson Greenville NHC HomeCare of Greenville Greenwood NHC HomeCare of Greenwood Laurens NHC HomeCare of Laurens Murrells Inlet NHC HomeCare of Murrells Inlet Summerville NHC HomeCare of Low Country West Columbia NHC HomeCare of Midlands Tennessee Athens NHC HomeCare of Athens Chattanooga NHC HomeCare of Chattanooga Columbia NHC HomeCare of Columbia Cookeville NHC HomeCare of Cookeville Dickson NHC HomeCare of Dickson Franklin NHC HomeCare of Franklin Hendersonville NHC HomeCare of Hendersonville Johnson City NHC HomeCare of Johnson City Knoxville NHC HomeCare of Knoxville Lawrenceburg NHC HomeCare of Lawrenceburg Lewisburg NHC HomeCare of Lewisburg McMinnville NHC HomeCare of McMinnville Milan NHC HomeCare of Milan Murfreesboro NHC HomeCare of Murfreesboro Nashville Ascension at Home St.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs a result, NHC Healthcare/Moulton, LLC’s motion to dismiss has been renewed and is now pending before the district court.
Biggest changeAs a result, NHC Healthcare/Moulton, LLC renewed its motion to dismiss.
Integrated Behavioral Health, Inc., NHC HealthCare/Moulton, LLC, et al., Case No. 2:20-CV-00877-AMM (N.D. Ala.) This is a qui tam case originally filed under seal on June 22, 2020. The United States declined intervention on March 1, 2021. Thereafter, the Plaintiff filed an amended Complaint against Dr. Sanja Malhotra, Integrated Behavioral Health, Inc. and other entities that Dr.
Integrated Behavioral Health, Inc., NHC HealthCare/Moulton, LLC, et al., Case No. 2:20-CV-00877-AMM (N.D. Ala.) This is a qui tam case originally filed under seal on June 22, 2020. The United States declined intervention on March 1, 2021. Thereafter, the Plaintiffs filed an amended Complaint against Dr. Sanja Malhotra, Integrated Behavioral Health, Inc. and other entities that Dr.
On January 28, 2022, the district court stayed this matter and administratively terminated the motion to dismiss pending the U.S. Supreme Court's review of a petition for certiorari filed in an unrelated matter but involving one of the legal arguments raised in the motion to dismiss. The U.S. Supreme Court recently denied the petition for certiorari in the unrelated matter.
On January 28, 2022, the district court stayed this matter and administratively terminated the motion to dismiss pending the U.S. Supreme Court's review of a petition for certiorari filed in an unrelated matter but involving one of the legal arguments raised in the motion to dismiss. Thereafter, the U.S. Supreme Court denied the petition for certiorari in the unrelated matter.
Malhotra is alleged to own or in which he has a financial interest. The Complaint also named multiple skilled nursing facilities as Defendants, including NHC Healthcare/Moulton, LLC, an affiliate of National HealthCare Corporation. The Complaint alleges that nurse practitioners affiliated with Dr.
Malhotra was alleged to own or in which he allegedly had a financial interest. The Complaint also named multiple skilled nursing facilities as Defendants, including NHC Healthcare/Moulton, LLC, an affiliate of National HealthCare Corporation. The Complaint alleged that nurse practitioners affiliated with Dr.
Malhotra provided free services to the facilities in exchange for referrals to entities owned by or in which Dr. Malhotra had a financial interest in violation of the False Claims Act and Anti-Kickback Statute. NHC Healthcare/Moulton, LLC denies the allegations and is vigorously defending the claim. A motion to dismiss was filed on November 4, 2021.
Malhotra provided free services to the facilities in exchange for referrals to entities owned by or in which Dr. Malhotra had a financial interest in violation of the False Claims Act and Anti-Kickback Statute. NHC Healthcare/Moulton, LLC denied the allegations and filed a motion to dismiss on November 4, 2021.
Added
The District Court granted NHC Healthcare/Moulton’s Motion to Dismiss, along with other pending Motions to Dismiss, and entered an Order of Dismissal on March 23, 2023 and an Amended Order of Dismissal on April 4, 2023, which dismissed the case in its entirety with prejudice with respect to the claims asserted by the Plaintiffs.
Added
The Plaintiffs filed a Notice of Appeal on April 20, 2023 to appeal the dismissal to the United States Court of Appeals for the Eleventh Circuit. On December 21, 2023, the Eleventh Circuit entered an Order affirming the District Court’s dismissal of the claims.
Added
The Plaintiffs have 90 days from the entry of the dismissal Order to file a Petition for a Writ of Certiorari with the United States Supreme Court requesting a review; otherwise, the Order affirming dismissal issued by the Eleventh Circuit will be final.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEquity Compensation Plans The following table sets forth information regarding our equity compensation plans: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 445,144 $ 66.62 2,042,701 Equity compensation plans not approved by security holders – – – Total 445,144 $ 66.62 2,042,701 27 Table of Contents The following graph and chart compare the cumulative total stockholder return for the period from January 1, 2018 through December 31, 2022 on an investment of $100 in (i) NHC’s common stock, (ii) the Standard & Poor’s 500 Stock Index ("S&P 500 Index") and (iii) the Standard & Poor’s Health Care Index ("S&P Health Care Index").
Biggest changeEquity Compensation Plans The following table sets forth information regarding our equity compensation plans: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 588,534 $ 61.30 1,751,461 Equity compensation plans not approved by security holders – – – Total 588,534 $ 61.30 1,751,461 27 Table of Contents The following graph and chart compare the cumulative total stockholder return for the period from January 1, 2019 through December 31, 2023 on an investment of $100 in (i) NHC’s common stock, (ii) the Standard & Poor’s 500 Stock Index ("S&P 500 Index") and (iii) the Standard & Poor’s Health Care Index ("S&P Health Care Index").
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed and traded on the NYSE-American exchange under the symbol “NHC.” On December 31, 2022, NHC had approximately 10,750 stockholders, comprised of approximately 2,050 stockholders of record and an additional 8,700 stockholders indicated by security position listings.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed and traded on the NYSE-American exchange under the symbol “NHC.” On December 31, 2023, NHC had approximately 13,250 stockholders, comprised of approximately 1,950 stockholders of record and an additional 11,300 stockholders indicated by security position listings.
Stock Repurchase Programs In 2022, the Company purchased 148,547 shares of its common stock for a total cost of $9,903,000. The shares were funded from cash on hand and were cancelled and returned to the status of authorized but unissued.
Stock Repurchase Programs In 2023, the Company purchased 44,349 shares of its common stock for a total cost of $2,482,000. The shares were funded from cash on hand and were cancelled and returned to the status of authorized but unissued.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe CODM does not review assets by segment in his resource allocation and therefore, assets by segment are not disclosed below. 31 Table of Contents The following tables set forth the Company’s consolidated statements of operations by business segment (in thousands ): Year Ended December 31, 2022 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 900,231 $ 128,854 $ – $ 1,029,085 Other revenues 136 – 45,060 45,196 Government stimulus income 11,457 – – 11,457 Net operating revenues and grant income 911,824 128,854 45,060 1,085,738 Costs and Expenses: Salaries, wages and benefits 580,707 77,688 27,774 686,169 Other operating 251,355 26,319 11,698 289,372 Facility rent 32,956 2,327 5,694 40,977 Depreciation and amortization 36,522 691 3,276 40,489 Interest 563 – – 563 Recovery of assets – – (3,728 ) (3,728 ) Total costs and expenses 902,103 107,025 44,714 1,053,842 Income before non-operating income 9,721 21,829 346 31,896 Non-operating income – – 11,141 11,141 Unrealized losses on marketable equity securities – – (15,806 ) (15,806 ) Income (loss) before income taxes $ 9,721 $ 21,829 $ (4,319 ) $ 27,231 Year Ended December 31, 2021 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 868,687 $ 96,855 $ – $ 965,542 Other revenues 386 – 45,014 45,400 Government stimulus income 63,360 – – 63,360 Net operating revenues and grant income 932,433 96,855 45,014 1,074,302 Costs and Expenses: Salaries, wages and benefits 557,604 59,226 49,233 666,063 Other operating 238,354 16,053 12,347 266,754 Facility rent 32,819 2,064 5,935 40,818 Depreciation and amortization 36,890 443 3,339 40,672 Interest 845 – – 845 Impairment of assets 4,497 – 3,728 8,225 Total costs and expenses 871,009 77,786 74,582 1,023,377 Income (loss) before non-operating income 61,424 19,069 (29,568 ) 50,925 Non-operating income – – 17,774 17,774 Gain on acquisition of equity method investment – – 95,202 95,202 Unrealized losses on marketable equity securities – – (13,863 ) (13,863 ) Income before income taxes $ 61,424 $ 19,069 $ 69,545 $ 150,038 32 Table of Contents Year Ended December 31, 2020 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 879,693 $ 52,102 $ – $ 931,795 Other revenues 3,403 – 45,514 48,917 Government stimulus income 47,505 – – 47,505 Net operating revenues and grant income 930,601 52,102 45,514 1,028,217 Costs and Expenses: Salaries, wages and benefits 546,188 37,377 37,427 620,992 Other operating 254,230 10,416 10,513 275,159 Facility rent 33,090 1,802 5,602 40,494 Depreciation and amortization 38,217 377 3,424 42,018 Interest 1,374 – 25 1,399 Total costs and expenses 873,099 49,972 56,991 980,062 Income (loss) before non-operating income 57,502 2,130 (11,477 ) 48,155 Non-operating income – – 26,527 26,527 Gain on acquisition of equity method investment – – 1,707 1,707 Unrealized losses on marketable equity securities – – (23,966 ) (23,966 ) Income (loss) before income taxes $ 57,502 $ 2,130 $ (7,209 ) $ 52,423 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.
Biggest changeThe CODM does not review assets by segment in his resource allocation and therefore, assets by segment are not disclosed below. 30 Table of Contents The following tables set forth the Company’s consolidated statements of operations by business segment (in thousands ): Year Ended December 31, 2023 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 956,077 $ 131,537 $ – $ 1,087,614 Other revenues 1,141 – 52,789 53,930 Net operating revenues 957,218 131,537 52,789 1,141,544 Costs and Expenses: Salaries, wages and benefits 589,279 80,610 42,455 712,344 Other operating 254,559 23,529 10,095 288,183 Facility rent 33,787 2,172 5,566 41,525 Depreciation and amortization 38,172 786 3,076 42,034 Interest 324 – – 324 Total costs and expenses 916,121 107,097 61,192 1,084,410 Income (loss) before non-operating income 41,097 24,440 (8,043 ) 57,134 Non-operating income – – 16,660 16,660 Unrealized gains on marketable equity securities – – 14,944 14,944 Income before income taxes $ 41,097 $ 24,440 $ 23,201 $ 88,738 Year Ended December 31, 2022 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 900,231 $ 128,854 $ – $ 1,029,085 Other revenues 136 – 45,060 45,196 Government stimulus income 11,457 – – 11,457 Net operating revenues and grant income 911,824 128,854 45,060 1,085,738 Costs and Expenses: Salaries, wages and benefits 580,707 77,688 27,774 686,169 Other operating 251,355 26,319 11,698 289,372 Facility rent 32,956 2,327 5,694 40,977 Depreciation and amortization 36,522 691 3,276 40,489 Interest 563 – – 563 Recovery of assets – – (3,728 ) (3,728 ) Total costs and expenses 902,103 107,025 44,714 1,053,842 Income before non-operating income 9,721 21,829 346 31,896 Non-operating income – – 11,141 11,141 Unrealized losses on marketable equity securities – – (15,806 ) (15,806 ) Income (loss) before income taxes $ 9,721 $ 21,829 $ (4,319 ) $ 27,231 31 Table of Contents Year Ended December 31, 2021 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 868,687 $ 96,855 $ – $ 965,542 Other revenues 386 – 45,014 45,400 Government stimulus income 63,360 – – 63,360 Net operating revenues and grant income 932,433 96,855 45,014 1,074,302 Costs and Expenses: Salaries, wages and benefits 557,604 59,226 49,233 666,063 Other operating 238,354 16,053 12,347 266,754 Facility rent 32,819 2,064 5,935 40,818 Depreciation and amortization 36,890 443 3,339 40,672 Interest 845 – – 845 Impairment of assets 4,497 – 3,728 8,225 Total costs and expenses 871,009 77,786 74,582 1,023,377 Income (loss) before non-operating income 61,424 19,069 (29,568 ) 50,925 Non-operating income – – 17,774 17,774 Gain on acquisition of equity method investment – – 95,202 95,202 Unrealized losses on marketable equity securities – – (13,863 ) (13,863 ) Income before income taxes $ 61,424 $ 19,069 $ 69,545 $ 150,038 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.
Our critical accounting policies that are both important to the portrayal of our financial condition and results and require our most difficult, subjective or complex judgments are as follows: Net Patient Revenues and Accounts Receivable Net patient revenues are derived from services rendered to patients for skilled and intermediate nursing, rehabilitation therapy, assisted living and independent living, home health care services and hospice services.
Our critical accounting policies that are both important to the portrayal of our financial condition and results and require our most difficult, subjective or complex judgments are as follows: Net Patient Revenues and Accounts Receivable Net patient revenues are derived from services rendered to patients for skilled and intermediate nursing, rehabilitation therapy, assisted living and independent living, home health care services, hospice services and behavioral health services.
Guarantees At December 31, 2022, we have no agreements to guarantee the debt obligations of other parties. We have no outstanding letters of credit. We may or may not in the future elect to use financial derivative instruments to hedge interest rate exposure in the future. At December 31, 2022, we did not participate in any such financial instruments.
Guarantees At December 31, 2023, we have no agreements to guarantee the debt obligations of other parties. We have no outstanding letters of credit. We may or may not in the future elect to use financial derivative instruments to hedge interest rate exposure in the future. At December 31, 2023, we did not participate in any such financial instruments.
In July 2022, CMS launched its enhanced Five-Star Quality Rating System which integrated weekend staffing rates for nurses and information on annual turnover among nurses and administrators.
In July 2022, CMS launched its enhanced Five-Star Quality Rating System which integrates weekend staffing rates for nurses and information on annual turnover among nurses and administrators.
In addition, we provide management services, accounting and financial services, and insurance services to third party operators of healthcare properties. We also own the real estate of 13 healthcare properties and lease these properties to third party operators.
In addition, we provide management services, accounting and financial services, and insurance services to third party operators of healthcare properties. We also own the real estate of 10 healthcare properties and lease these properties to third party operators.
Credit losses are recorded as bad debt expense, which is included as a component of other operating expenses in the interim condensed consolidated statements of operations Revenue Recognition – Third Party Payors Medicare and Medicaid program revenues, as well as certain Managed Care program revenues, are subject to audit and retroactive adjustment by government representatives or their agents.
Credit losses are recorded as bad debt expense, which is included as a component of other operating expenses consolidated statements of operations Revenue Recognition – Third Party Payors Medicare and Medicaid program revenues, as well as certain Managed Care program revenues, are subject to audit and retroactive adjustment by government representatives or their agents.
Percentage of Net Operating Revenues Year Ended December 31, 2022 2021 2020 Revenues: Net patient revenues 94.8 % 89.9 % 90.6 % Other revenues 4.2 4.2 4.8 Government stimulus income 1.0 5.9 4.6 Net operating revenues and grant income 100.0 100.0 100.0 Costs and Expenses: Salaries, wages and benefits 63.2 62.0 60.4 Other operating 26.6 24.8 26.8 Facility rent 3.8 3.8 3.9 Depreciation and amortization 3.7 3.8 4.1 Interest 0.1 0.1 0.1 Impairment (recovery) of assets (0.3 ) 0.8 – Total costs and expenses 97.1 95.3 95.3 Income from operations 2.9 4.7 4.7 Non–operating income 1.0 1.7 2.6 Gain on acquisition of equity method investments – 8.8 0.1 Unrealized losses on marketable equity securities (1.4 ) (1.3 ) (2.3 ) Income before income taxes 2.5 13.9 5.1 Income tax provision (0.7 ) (1.0 ) (1.0 ) Net income 1.8 12.9 4.1 Net loss attributable to noncontrolling interest 0.3 0.0 0.0 Net income attributable to common stockholders of NHC 2.1 % 12.9 % 4.1 % 34 Table of Contents The following table sets forth the increase or (decrease) in certain items from the consolidated statements of operations as compared to the prior period (dollars in thousands) .
Percentage of Net Operating Revenues Year Ended December 31, 2023 2022 2021 Revenues: Net patient revenues 95.3 % 94.8 % 89.9 % Other revenues 4.7 4.2 4.2 Government stimulus income – 1.0 5.9 Net operating revenues and grant income 100.0 100.0 100.0 Costs and Expenses: Salaries, wages and benefits 62.4 63.2 62.0 Other operating 25.2 26.6 24.8 Facility rent 3.6 3.8 3.8 Depreciation and amortization 3.7 3.7 3.8 Interest 0.1 0.1 0.1 Impairment (recovery) of assets – (0.3 ) 0.8 Total costs and expenses 95.0 97.1 95.3 Income from operations 5.0 2.9 4.7 Non–operating income 1.5 1.0 1.7 Gain on acquisition of equity method investment – – 8.8 Unrealized gains (losses) on marketable equity securities 1.3 (1.4 ) (1.3 ) Income before income taxes 7.8 2.5 13.9 Income tax provision (2.1 ) (0.7 ) (1.0 ) Net income 5.7 1.8 12.9 Net loss attributable to noncontrolling interest 0.2 0.3 0.0 Net income attributable to common stockholders of NHC 5.9 % 2.1 % 12.9 % 33 Table of Contents The following table sets forth the increase or (decrease) in certain items from the consolidated statements of operations as compared to the prior period (dollars in thousands) .
The Company recorded $11,457,000, $63,360,000 and $47,505,000 of government stimulus income from the Provider Relief Funds for the years ended December 31, 2022, 2021 and 2020, respectively. The grant income was determined on a systemic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate.
The Company recorded $0, $11,457,000 and $63,360,000 of government stimulus income from the Provider Relief Funds for the years ended December 31, 2023, 2022 and 2021, respectively. The grant income was determined on a systemic basis in line with the recognition of specific expenses and lost revenues for which the grants are intended to compensate.
Specifically, the Company believes the presentation of non-GAAP financial information should exclude the following items: the unrealized gains or losses on our marketable equity securities, operating results for the newly constructed healthcare facilities not at full capacity, any gains on the acquisition of equity method investments, gains on the sale of healthcare facilities, stock-based compensation expense, and impairments or recoveries of long-lived assets and notes receivable.
Specifically, the Company believes the presentation of non-GAAP financial information should exclude the following items: the unrealized gains or losses on our marketable equity securities, operating results for start-up healthcare operations not at full capacity, any gains on the acquisition of equity method investments, gains on the sale of property and equipment, stock-based compensation expense, and impairments or recoveries of long-lived assets and notes receivable.
New Accounting Pronouncements The Company did not adopt any new accounting standards during 2022.
New Accounting Pronouncements The Company did not adopt any new accounting standards during 2023.
The operating results for the start-up operations not at full capacity include the following: for the year ended December 31, 2022, included are operations that began from 2020 to 2022, which is two behavioral health hospitals, one hospice agency, and one homecare agency.
The operating results for the start-up operations not at full capacity include the following: for the year ended December 31, 2023, included are operations that began from 2021 to 2023, which is two behavioral health hospitals, two homecare agencies, and two hospice agencies.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of December 31, 2022: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 68 Number of 4 and 5-star rated skilled nursing facilities 42 Percentage of 4 and 5-star rated skilled nursing facilities 62% 37% Average rating for all skilled nursing facilities, end of period 3.8 2.9 30 Table of Contents Development and Growth We are undertaking to expand our post–acute and senior health care operations while protecting our existing operations and markets.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of December 31, 2023: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 68 Number of 4 and 5-star rated skilled nursing facilities 40 Percentage of 4 and 5-star rated skilled nursing facilities 59% 36% Average rating for all skilled nursing facilities, end of period 3.6 2.9 Development and Growth We are undertaking to expand our post–acute and senior health care operations while protecting our existing operations and markets.
The composite skilled nursing facility per diem increased 2.3% in 2022 compared to 2021. Medicare and managed care per diem rates increased 2.3% and 6.0%, respectively, in 2022 compared to 2021. Medicaid and private pay per diem rates increased 3.0% and 4.7%, respectively, in 2022 compared to 2021.
The composite skilled nursing facility per diem increased 6.7% in 2023 compared to 2022. Medicare and managed care per diem rates increased 3.3% and 5.9%, respectively, in 2023 compared to 2022. Medicaid and private pay per diem rates increased 9.4% and 5.5%, respectively, in 2023 compared to 2022.
Any differences between our original estimates of reimbursements and subsequent revisions are reflected in operations in the period in which the revisions are made often due to final determination or the period of payment no longer being subject to audit or review. 40 Table of Contents Accrued Risk Reserves We are self–insured for risks related to health insurance and have wholly–owned limited purpose insurance companies that insure risks related to workers’ compensation and general and professional liability insurance claims.
Any differences between our original estimates of reimbursements and subsequent revisions are reflected in operations in the period in which the revisions are made often due to final determination or the period of payment no longer being subject to audit or review. 39 Table of Contents Accrued Risk Reserves We are self–insured for risks related to workers’ compensation and general and professional liability insurance.
Investing Activities Net cash used in investing activities totaled $5,978,000 for the year ended December 31, 2022, as compared to $65,889,000 and $63,878,000 for the years ended December 31, 2021 and 2020, respectively. Cash used for property and equipment additions was $30,200,000, $39,399,000, and $21,873,000 for the years ended December 31, 2022, 2021 and 2020, respectively.
Investing Activities Net cash used in investing activities totaled $17,568,000 for the year ended December 31, 2023, as compared to $5,978,000 and $65,889,000 for the years ended December 31, 2022 and 2021, respectively. Cash used for property and equipment additions was $27,901,000, $30,200,000, and $39,399,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2022, we operate or manage 68 skilled nursing facilities with 8,726 1icensed beds, 23 assisted living facilities with 1,181 units, five independent living facilities, three behavioral health hospitals, 35 homecare agencies, and 29 hospice agencies located in 8 states.
At December 31, 2023, we operate or manage 68 skilled nursing facilities with 8,732 1icensed beds, 26 assisted living facilities with 1,501 units, five independent living facilities, three behavioral health hospitals, 35 homecare agencies, and 30 hospice agencies located in 8 states.
Our ability to obtain long-term debt to meet our long–term contractual obligations and to finance our operating requirements, growth and development plans will depend upon our future performance, which will be affected by business, economic, financial and other factors, including potential changes in state and federal government payment rates for health care, customer demand, success of our marketing efforts, pressures from competitors, and the state of the economy, including the state of financial and credit markets.
Our ability to obtain long-term debt to meet our long–term contractual obligations and to finance our operating requirements, growth and development plans will depend upon our future performance, which will be affected by business, economic, financial and other factors, including potential changes in state and federal government payment rates for health care, customer demand, success of our marketing efforts, pressures from competitors, and the state of the economy, including the state of financial and credit markets, as well as many unforeseen factors. 38 Table of Contents Contingencies See Note 17 to the consolidated financial statements for additional information on pending litigation and other contingencies.
For the year ended December 31, 2020, included are facilities that began operations from 2018 to 2020, which is one memory care facility. 33 Table of Contents The table below provides reconciliations of GAAP to non-GAAP items ( dollars in thousands, except per share data ): Year Ended December 31, 2022 2021 2020 Net income attributable to National HealthCare Corporation $ 22,445 $ 138,590 $ 41,871 Non-GAAP adjustments: Unrealized losses on marketable equity securities 15,806 13,863 23,966 Gain on sale of real estate/healthcare facilities – – (2,784 ) Gain on acquisition of equity method investment – (95,202 ) (1,707 ) Stock-based compensation expense 2,612 2,620 2,453 Operating results for newly-opened operations not at full capacity 5,416 922 602 Impairment (recovery) of assets (3,728 ) 8,225 – Income tax benefit on non-GAAP adjustments (5,228 ) (6,373 ) (5,858 ) Non-GAAP Net Income $ 37,323 $ 62,645 $ 58,543 GAAP diluted earnings per share $ 1.45 $ 8.99 $ 2.72 Non-GAAP adjustments: Unrealized losses on marketable equity securities 0.76 0.67 1.15 Gain on sale of real estate/healthcare facilities – – (0.13 ) Gain on acquisition of equity method investment – (6.16 ) (0.08 ) Stock-based compensation expense 0.13 0.13 0.12 Operating results for newly-opened operations not at full capacity 0.26 0.04 0.03 Impairment (recovery) of assets (0.18 ) 0.39 – Non-GAAP diluted earnings per share $ 2.42 $ 4.06 $ 3.81 Results of Operations The following table and discussion set forth items from the consolidated statements of operations as a percentage of net operating revenues and grant income for the years ended December 31, 2022, 2021 and 2020.
For the year ended December 31, 2021, included are facilities that began operations from 2019 to 2021, which is two behavioral health hospitals and one memory care facility. 32 Table of Contents The table below provides reconciliations of GAAP to non-GAAP items ( dollars in thousands, except per share data ): Year Ended December 31, 2023 2022 2021 Net income attributable to National HealthCare Corporation $ 66,798 $ 22,445 $ 138,590 Non-GAAP adjustments: Unrealized (gains) losses on marketable equity securities (14,944 ) 15,806 13,863 Gain on sale of property and equipment (6,230 ) – – Gain on acquisition of equity method investment – – (95,202 ) Stock-based compensation expense 2,782 2,612 2,620 Operating results for newly-opened operations not at full capacity 2,359 5,416 922 Impairment (recovery) of assets – (3,728 ) 8,225 Income tax expense (benefit) on non-GAAP adjustments 4,169 (5,228 ) (6,373 ) Non-GAAP Net Income $ 54,934 $ 37,323 $ 62,645 GAAP diluted earnings per share $ 4.34 $ 1.45 $ 8.99 Non-GAAP adjustments: Unrealized (gains) losses on marketable equity securities (0.72 ) 0.76 0.67 Gain on sale of property and equipment (0.30 ) – – Gain on acquisition of equity method investment – – (6.16 ) Stock-based compensation expense 0.13 0.13 0.13 Operating results for newly-opened operations not at full capacity 0.10 0.26 0.04 Impairment (recovery) of assets – (0.18 ) 0.39 Non-GAAP diluted earnings per share $ 3.55 $ 2.42 $ 4.06 Results of Operations The following table and discussion set forth items from the consolidated statements of operations as a percentage of net operating revenues and grant income for the years ended December 31, 2023, 2022 and 2021.
Type of Operation Description Size Location Placed in Service Skilled Nursing Acquisition 166 beds Knoxville, TN February 2020 Assisted Living Bed Addition 20 beds Gallatin, TN September 2020 Skilled Nursing Bed Addition 30 beds Kingsport, TN December 2020 Hospice Acquisition 28 agencies Various June 2021 Homecare New Agency 1 agency Anderson, SC January 2022 Hospice New Agency 1 agency Tullahoma, TN March 2022 Behavioral Health Hospital New Facility 64 beds Knoxville, TN April 2022 Behavioral Health Hospital New Facility 16 beds St.
Type of Operation Description Size Location Placed in Service Hospice Acquisition 28 agencies Various June 2021 Homecare New Agency 1 agency Anderson, SC January 2022 Hospice New Agency 1 agency Tullahoma, TN March 2022 Behavioral Health Hospital New Facility 64 beds Knoxville, TN April 2022 Behavioral Health Hospital New Facility 16 beds St.
Income taxes The income tax provision for 2022 is $7,254,000 (an effective income tax rate of 26.6%). 2021 Compared to 2020 Results for the year ended December 31, 2021 compared to 2020 include a 4.5% increase in net operating revenues and grant income and a 231.2% increase in net income attributable to NHC.
Income taxes The income tax provision for 2023 is $23,450,000 (an effective income tax rate of 26.4%). 2022 Compared to 2021 Results for the year ended December 31, 2022 compared to 2021 include a 1.1% increase in net operating revenues and grant income.
Cash provided by operating activities consisted of net income of $19,977,000 and adjustments for non–cash items of $60,697,000. There was cash used for working capital in the amount of $73,697,000 for the year ended December 31, 2022 compared to 40,738,000 in 2021.
Cash provided by operating activities consisted of net income of $65,288,000 and adjustments for non–cash items of $33,625,000. There was cash provided by working capital in the amount of $17,396,000 for the year ended December 31, 2023 compared to cash used for working capital needs in the amount of $73,697,000 in 2022.
The following is a summary of our sources and uses of cash flows (dollars in thousands) : Year Ended One Year Change Year Ended One Year Change 12/31/22 12/31/21 $ % 12/31/21 12/31/20 $ % Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period $ 119,743 $ 158,502 $ (38,759 ) (24.5 ) $ 158,502 $ 61,010 $ 97,492 159.8 Cash provided by operating activities 8,742 62,394 (53,652 ) (86.0 ) 62,394 203,259 (140,865 ) (69.3 ) Cash used in investing activities (5,978 ) (65,889 ) 59,911 90.9 (65,889 ) (63,878 ) (2,011 ) (3.1 ) Cash used in financing activities (47,642 ) (35,264 ) (12,378 ) (35.1 ) (35,264 ) (41,889 ) 6,625 15.8 Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 74,865 $ 119,743 $ (44,878 ) (37.5 ) $ 119,743 $ 158,502 $ (38,759 ) (24.5 ) 38 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2022 was $8,742,000 as compared to $62,394,000 and $203,259,000 for the years ended December 31, 2021 and 2020, respectively.
The following is a summary of our sources and uses of cash flows (dollars in thousands) : Year Ended One Year Change Year Ended One Year Change 12/31/23 12/31/22 $ % 12/31/22 12/31/21 $ % Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period $ 74,865 $ 119,743 $ (44,878 ) (37.5 ) $ 119,743 $ 158,502 $ (38,759 ) (24.5 ) Cash provided by operating activities 111,216 8,742 102,474 1,172.2 8,742 62,394 (53,652 ) (86.0 ) Cash used in investing activities (17,568 ) (5,978 ) (11,590 ) (193.9 ) (5,978 ) (65,889 ) 59,911 90.9 Cash used in financing activities (42,545 ) (47,642 ) 5,097 10.7 (47,642 ) (35,264 ) (12,378 ) (35.1 ) Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 125,968 $ 74,865 $ 51,103 68.3 $ 74,865 $ 119,743 $ (44,878 ) (37.5 ) 37 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2023 was $111,216,000 as compared to $8,742,000 and $62,394,000 for the years ended December 31, 2022 and 2021, respectively.
For the year ended December 31, 2021, included are facilities that began operations from 2019 to 2021, which is one memory care facility and two behavioral health hospitals.
For the year ended December 31, 2022, included are facilities that began operations from 2020 to 2022, which is two behavioral health hospitals, one hospice agency, and one homecare agency.
The accrued risk reserves include a liability for reported claims and estimates for incurred but unreported claims. Our policy is to engage an external, independent actuary to assist in estimating our exposure for claims obligations (for both asserted and unasserted claims). We reassess our accrued risk reserves on a quarterly basis.
Our policy is to engage an external, independent actuary to assist in estimating our exposure for claims obligations (for both asserted and unasserted claims). We reassess our accrued risk reserves on a quarterly basis. Professional liability remains an area of particular concern to us.
In June 2021, the Company acquired the remaining ownership interest in Caris, which resulted in net patient revenues increasing $31,566,000 for the year ended December 31, 2022 compared to the prior year.
Medicaid and private pay per diem rates increased 3.0% and 4.7%, respectively, in 2022 compared to 2021. In June 2021, the Company acquired the remaining ownership interest in Caris, which resulted in net patient revenues increasing $31,566,000 for the year ended December 31, 2022 compared to the prior year.
Our experience is that achieving goals in these patient care areas improves both patient and employee satisfaction. Segment Reporting The Company has two reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals; and (2) homecare and hospice services.
Segment Reporting The Company has two reportable operating segments: (1) inpatient services, which includes the operation of skilled nursing facilities, assisted and independent living facilities, and behavioral health hospitals; and (2) homecare and hospice services.
The overall census in owned and leased skilled nursing facilities for 2022 was 83.8% compared to 80.6% in 2021 and 83.6% in 2020. Due to the pandemic, as well as the increased strain the pandemic has caused on America's healthcare labor shortage, the challenge of maintaining desirable patient census levels has been amplified.
The overall census (based on operational beds) in owned and leased skilled nursing facilities for 2023 was 87.9% compared to 83.8% in 2022 and 80.6% in 2021. The pandemic caused an increased strain on America's healthcare workforce, which has created the challenge of maintaining desirable patient census levels.
Included in net patient revenues for the year ended December 31, 2022 and 2021, respectively, is $19,442,000 and $20,482,000 of COVID-19 supplemental Medicaid payments that were received to help mitigate the incremental costs in fighting the public health emergency. The overall average census in owned and leased skilled nursing facilities for 2022 was 83.8% compared to 80.6% in 2021.
Included in net patient revenues for the years ended December 31, 2023 and 2022, respectively, is $20,214,000 and $19,442,000 of supplemental Medicaid payments that were received to help mitigate the inflationary labor and medical supplies costs caused by the pandemic. The overall average census in owned and leased skilled nursing facilities for 2023 was 87.9% compared to 83.8% in 2022.
Period to Period Increase (Decrease) 2022 vs. 2021 2021 vs. 2020 Amount Percent Amount Percent Revenues: Net patient revenues $ 63,543 6.6 % $ 33,747 3.6 % Other revenues (204 ) (0.4 ) (3,517 ) (7.2 ) Government stimulus income (51,903 ) (81.9 ) 15,855 33.4 Net operating revenues and grant income 11,436 1.1 46,085 4.5 Costs and Expenses: Salaries, wages and benefits 20,106 3.0 45,071 7.3 Other operating 22,618 8.5 (8,405 ) (3.1 ) Facility rent 159 0.4 324 0.8 Depreciation and amortization (183 ) (0.4 ) (1,346 ) (3.2 ) Interest (282 ) (33.4 ) (554 ) (39.6 ) Impairment (recovery) of assets (11,953 ) (145.3 ) 8,225 100.0 Total costs and expenses 30,465 3.0 43,315 4.4 Income from operations (19,029 ) (37.4 ) 2,770 5.8 Non–operating income (6,633 ) (37.3 ) (8,753 ) (33.0 ) Gain on acquisition of equity method investment (95,202 ) (100.0 ) 93,495 5,477.2 Unrealized losses on marketable equity securities (1,943 ) (14.0 ) 10,103 42.2 Income before income taxes (122,807 ) (81.9 ) 97,615 186.2 Income tax provision 3,697 33.8 (518 ) (5.0 ) Net income (119,110 ) (85.6 ) 97,097 231.2 Net income attributable to noncontrolling interest 2,965 596.6 (378 ) (317.6 ) Net income attributable to common stockholders of NHC $ (116,145 ) (83.8 )% $ 96,719 231.0 % 2022 Compared to 2021 Results for the year ended December 31, 2022 compared to 2021 include a 1.1% increase in net operating revenues and grant income.
Period to Period Increase (Decrease) 2023 vs. 2022 2022 vs. 2021 Amount Percent Amount Percent Revenues: Net patient revenues $ 58,529 5.7 % $ 63,543 6.6 % Other revenues 8,734 19.3 (204 ) (0.4 ) Government stimulus income (11,457 ) (100.0 ) (51,903 ) (81.9 ) Net operating revenues and grant income 55,806 5.1 11,436 1.1 Costs and Expenses: Salaries, wages and benefits 26,175 3.8 20,106 3.0 Other operating (1,189 ) (0.4 ) 22,618 8.5 Facility rent 548 1.3 159 0.4 Depreciation and amortization 1,545 3.8 (183 ) (0.4 ) Interest (239 ) (42.5 ) (282 ) (33.4 ) Impairment (recovery) of assets 3,728 100.0 (11,953 ) (145.3 ) Total costs and expenses 30,568 2.9 30,465 3.0 Income from operations 25,238 79.1 (19,029 ) (37.4 ) Non–operating income 5,519 49.5 (6,633 ) (37.3 ) Gain on acquisition of equity method investment – – (95,202 ) (100.0 ) Unrealized gains (losses) on marketable equity securities 30,750 194.5 (1,943 ) (14.0 ) Income before income taxes 61,507 225.9 (122,807 ) (81.9 ) Income tax provision (16,196 ) (223.3 ) 3,697 33.8 Net income 45,311 226.8 (119,110 ) (85.6 ) Net (income) loss attributable to noncontrolling interest (958 ) (38.8 ) 2,965 596.6 Net income attributable to common stockholders of NHC $ 44,353 197.6 % $ (116,145 ) (83.8 )% 2023 Compared to 2022 Results for the year ended December 31, 2023 compared to 2022 include a 5.1% increase in net operating revenues and grant income.
Net operating revenues and grant income Net patient revenues totaled $1,029,085,000, an increase of $63,543,000, or 6.6%, compared to the prior year.
Net operating revenues and grant income Net patient revenues totaled $1,087,614,000 an increase of $58,529,000, or 5.7%, compared to the prior year.
We received cash distributions from our unconsolidated investments of $439,000 during the year ended December 31, 2022, compared to $6,314,000 in the prior year. Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized losses on our marketable equity securities, recovery of assets, deferred taxes, and stock compensation.
Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized losses on our marketable equity securities, recovery of assets, deferred taxes, and stock compensation.
The new laws impacted healthcare providers in a variety of ways, but the largest legislation from a monetary relief perspective is the CARES Act. Through the CARES Act, as well as the PPPCHE, the federal government allocated $178 billion to the Public Health and Social Services Emergency Fund, which is referred to as the Provider Relief Fund.
Through the CARES Act, as well as the PPPCHE, the federal government allocated $178 billion to the Public Health and Social Services Emergency Fund, which is referred to as the Provider Relief Fund.
As to exposure for professional liability claims, we have developed performance measures to bring focus to the patient care issues most likely to produce professional liability exposure, including in–house acquired pressure ulcers, significant weight loss and numbers of falls. These programs for certification, which we regularly modify and improve, have produced measurable improvements in reducing these incidents.
We have set aside restricted cash and restricted marketable securities to fund our professional liability and workers’ compensation reserves. As to exposure for professional liability claims, we have developed performance measures to bring focus to the patient care issues most likely to produce professional liability exposure, including in–house acquired pressure ulcers, significant weight loss and numbers of falls.
Liquidity, Capital Resources and Financial Condition Sources and Uses of Funds Our primary sources of cash include revenues from the operations of our healthcare operations, management and accounting services, rental income, and investment income.
Income taxes The income tax provision for 2022 is $7,254,000 (an effective income tax rate of 26.6%). 36 Table of Contents Liquidity, Capital Resources and Financial Condition Sources and Uses of Funds Our primary sources of cash include revenues from the operations of our healthcare operations, management and accounting services, rental income, and investment income.
Proceeds from the sale of marketable securities, net of purchases, resulted in cash proceeds of $16,168,000 in 2022. In 2021, we had purchases of marketable securities, net of sales, that resulted in a net use of cash of $6,267,000. The Company collected notes receivable of $3,879,000 and $8,840,000 for the years ended December 31, 2022 and 2021, respectively.
Proceeds from the sale of marketable securities, net of purchases, resulted in cash proceeds of $17,895,000 and $16,168,000 in 2023 and 2022, respectively. For the year ended December 31, 2022, the Company collected notes receivable of $3,879,000 and received proceeds from the sale of property and equipment of $4,175,000.
Professional liability remains an area of particular concern to us. The long-term care industry has seen an increase in personal injury/wrongful death claims based on alleged negligence by skilled nursing facilities and their employees in providing care to residents.
The long-term care industry has seen an increase in personal injury/wrongful death claims based on alleged negligence by skilled nursing facilities and their employees in providing care to residents. The Company has been, and continues to be, subject to claims and legal actions that arise in the ordinary course of business, including potential claims related to patient care and treatment.
The Company’s assessment of whether the terms and conditions for amounts received have been met for income recognition and the Company’s related income calculation considered all frequently asked questions and other interpretive guidance issued to date by HHS. 29 Table of Contents Additionally, as part of the CARES Act, the legislation included an expansion of the Medicare Accelerated and Advance Payment Program.
The Company’s assessment of whether the terms and conditions for amounts received have been met for income recognition and the Company’s related income calculation considered all frequently asked questions and other interpretive guidance issued to date by HHS. 29 Table of Contents Executive Summary Earnings To monitor our earnings, we have developed budgets and management reports to monitor labor, census, and the composition of revenues.
Executive Summary Earnings To monitor our earnings, we have developed budgets and management reports to monitor labor, census, and the composition of revenues. Inflationary increases in our costs may cause net earnings from patient services to decline. Occupancy A primary area of management focus continues to be the rates of occupancy within our skilled nursing facilities.
During certain inflationary times, our net patient revenues and government reimbursement may not keep pace with inflationary increases in our expenses, which may cause net earnings to decline. Occupancy A primary area of management focus continues to be the rates of occupancy within our skilled nursing facilities.
Proceeds from the issuance of common stock totaled $2,114,000, $3,441,000, and $1,756,000 for 2022, 2021 and 2020, respectively. We repurchased common shares outstanding in the amount of $9,903,000, $836,000, and $53,000 for the years ended December 31, 2022, 2021, and 2020, respectively.
We repurchased common shares outstanding in the amount of $2,482,000, $9,903,000, and $836,000 for the years ended December 31, 2023, 2022, and 2021, respectively. Short – term liquidity We expect to meet our short–term liquidity requirements primarily from our cash flows from operating activities.
Included in net patient revenues for the year end December 31, 2021 and 2020, respectively, is $20,482,000 and $26,179,000 of COVID-19 supplemental Medicaid payments that were received to help mitigate the incremental costs in fighting the public health emergency. The overall average census in owned and leased skilled nursing facilities for 2021 was 80.6% compared to 83.6% in 2020.
Net operating revenues and grant income Net patient revenues totaled $1,029,085,000, an increase of $63,543,000, or 6.6%, compared to the prior year. Included in net patient revenues for the year ended December 31, 2022 and 2021, respectively, is $19,442,000 and $20,482,000 of supplemental Medicaid payments that were received to help mitigate the incremental costs in fighting the pandemic.
In addition to cash flows from operations, our current cash on hand of $58,667,000 and unrestricted marketable securities of $123,922,000 are expected to be adequate to meet our contractual obligations, operating liquidity, and our growth and development plans in the next twelve months.
In addition to cash flows from operations, we have current cash on hand of $107,076,000 and unrestricted marketable equity and debt securities of $116,544,000. We also have unencumbered real estate, as well the borrowing capacity on our $50 million credit facility, that can be used to meet our contractual obligations and growth and development plans in the next twelve months.
For the years ended December 31, 2021 and 2020, respectively, we recorded $63,360,000 and $47,505,000 in government stimulus income related to funds received from the Provider Relief Fund.
For the years ended December 31, 2023 and 2022, respectively, we recorded $0 and $11,457,000 in government stimulus income related to funds received from the CARES Act Provider Relief Fund. Total costs and expenses Total costs and expenses for 2023 increased $30,568,000, or 2.9%, to $1,084,410,000 from $1,053,842,000 in 2022.
Principal payments made under finance lease obligations was $4,695,000, $4,423,000, and $4,166,000 for the years ended December 31, 2022, 2021, and 2020, respectively. Dividends paid to common stockholders was $34,604,000, $32,030,000, and $31,921,000 for the years ended December 31, 2022, 2021 and 2020, respectively.
Financing Activities Net cash used in financing activities totaled $42,545,000, $47,642,000, and $35,264,000 for the years ended December 31, 2023, 2022, and 2021, respectively. Principal payments made under finance lease obligations was $4,985,000, $4,695,000, and $4,423,000 for the years ended December 31, 2023, 2022, and 2021, respectively.
These legislative initiatives have been beneficial to partially mitigate the impact of the COVID-19 pandemic on our results of operations and financial position to date. Legislation and Government Stimulus Due to COVID-19 The U.S. government enacted several laws beginning in March 2020 designed to help the nation respond to the COVID-19 pandemic.
Legislation and Government Stimulus Due to COVID-19 The U.S. government enacted several laws beginning in March 2020 designed to help the nation respond to the COVID-19 pandemic. The new laws impacted healthcare providers in a variety of ways, but the largest legislation from a monetary relief perspective was the CARES Act.
Long – term liquidity We expect to meet our long–term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $58,667,000, and unrestricted marketable securities of $123,922,000. We also have substantial value in our unencumbered real estate assets which could potentially be used as collateral in future borrowing opportunities.
Long – term liquidity We expect to meet our long–term liquidity requirements primarily from our cash flows from operating activities, our current cash on hand of $107,076,000, our unrestricted marketable equity and debt securities of $116,544,000, and our borrowing capacity on the $50 million credit facility.
Medicare and managed care per diem rates increased 2.0% and 1.3%, respectively, in 2021 compared to 2020. Medicaid and private pay per diem rates increased 2.2% and 2.4%, respectively, in 2021 compared to 2020.
The overall average census in owned and leased skilled nursing facilities for 2022 was 83.8% compared to 80.6% in 2021. The composite skilled nursing facility per diem increased 2.3% in 2022 compared to 2021. Medicare and managed care per diem rates increased 2.3% and 6.0%, respectively, in 2022 compared to 2021.
Our Caris acquisition increased other operating expenses $8,368,000 for the year ended December 31, 2021 compared to 2020. 37 Table of Contents Facility rent expense decreased $324,000, or 0.8%, to $40,818,000. Depreciation and amortization decreased 3.2% to $40,672,000. Interest expense decreased $554,000 to $845,000 in 2021 from $1,399,000 in 2020. At December 31, 2021, we have no outstanding long-term debt.
We continue to face inflationary pressures in certain categories within other operating expenses as well, such as food/dietary supplies and drugs/pharmaceutical supplies. Facility rent expense increased $548,000, or 1.3%, to $41,525,000. Depreciation and amortization increased 3.8% to $42,034,000. Interest expense decreased $239,000 to $324,000 in 2023 from $563,000 in 2022. At December 31, 2023, we have no outstanding long-term debt.
For the year ended December 31, 2021, GAAP net income attributable to NHC was $138,590,000 compared to net income of $41,871,000 for the same period in 2020. The large increase in our reported GAAP 2021 net income compared to 2020 is primarily due to the $95.2 million gain recorded from the acquisition of Caris, a hospice provider.
For the year ended December 31, 2023, GAAP net income attributable to NHC was $66,798,000 compared to net income of $22,445,000 for the same period in 2022.
Excluding the gain on the Caris acquisition, as well as the unrealized losses in our marketable equity securities portfolio and the other non-GAAP adjustments, non-GAAP net income for the year ended December 31, 2021 was $62,645,000 compared to $58,543,000 for the year ended December 31, 2020. 36 Table of Contents Net operating revenues and grant income Net patient revenues totaled $965,542,000, an increase of $33,747,000, or 3.6%, compared to the prior year.
Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $54,934,000 for the year ended December 31, 2023 compared to $37,323,000 for the same period a year ago.
In November 2020, the Company sold a skilled nursing facility located in Town & Country, Missouri. For the year ended December 31, 2021, the sale of this facility decreased net patient revenue by $7,323,000 compared to 2020. Other revenues in 2021 were $45,400,000, a decrease of $3,517,000, or 7.2%, as further detailed in Note 4 of the consolidated financial statements.
In September 2022, the Company transferred the operations of seven skilled nursing facilities located in Massachusetts and New Hampshire, which resulted in net patient revenues decreasing $48,820,000 for the year ended December 31, 2023 compared to the same period last year. 34 Table of Contents Other revenues in 2023 were $53,930,000, an increase of $8,734,000, or 19.3%, as further detailed in Note 4 to our consolidated financial statements.
For the year ended December 31, 2021, our agency nurse staffing expenses were $36,391,000 compared to $11,686,000 for the 2020 year. Other operating expenses decreased $8,405,000, or 3.1%, to $266,754,000 for 2021 compared to $275,159,000 in 2020. These costs were 24.8% and 26.8% of net operating revenues and grant income for 2021 and 2020, respectively.
Other operating expenses decreased $1,189,000, or 0.4%, to $288,183,000 for the year ended December 31, 2023 compared to $289,372,000 for the prior year. Other operating expenses as a percentage of net operating revenues and grant income was 25.2% and 26.7% for the years ended December 31, 2023 and 2022, respectively.
Louis, MO June 2022 Accrued Risk Reserves Our accrued professional liability and workers’ compensation reserves totaled $102,469,000 and $98,048,000 at December 31, 2022 and 2021, respectively, and are a primary area of management focus. We have set aside restricted cash and restricted marketable securities to fund our professional liability and workers’ compensation reserves.
Louis, MO June 2022 Hospice New Agency 1 agency Cedar Bluff, VA March 2023 Skilled Nursing Acquisition 66 beds Nashville, TN May 2023 Homecare New Agency 1 agency Tallahassee, FL May 2023 Assisted Living Facility New Operations 135 units Vero Beach, FL July 2023 Assisted Living Facility New Operations 95 units Merritt Island, FL July 2023 Assisted Living Facility New Operations 100 units Stuart, FL July 2023 Accrued Risk Reserves Our accrued professional liability and workers’ compensation reserves totaled $103,259,000 and $102,469,000 at December 31, 2023 and 2022, respectively, and are a primary area of management focus.
Removed
Impact of COVID-19 In early March 2020, COVID-19, a disease caused by the novel strain of the coronavirus, was characterized as a pandemic by the World Health Organization. As a provider of healthcare services, we are significantly exposed to the public health and economic effects of the COVID-19 pandemic.
Added
These programs for certification, which we regularly modify and improve, have produced measurable improvements in reducing these incidents. Our experience is that achieving goals in these patient care areas improves both patient and employee satisfaction.
Removed
NHC’s primary objective has remained the same throughout the COVID-19 pandemic: that is to protect the health and safety of our patients, residents, and partners (employees).
Added
The net operating revenues increase was primarily driven by the continued occupancy increase in our skilled nursing facilities, as well as increases in skilled nursing per diems from some of our governmental payors.
Removed
We continue to follow all guidance from the Centers for Medicare and Medicaid Services (“CMS”), the Centers for Disease Control and Prevention (“CDC”), and state and local health departments to prevent the spread of the disease within our operations. We began our first vaccination clinics in our skilled nursing facilities in December 2020.
Added
Excluding the government stimulus income and the seven skilled nursing facilities in Massachusetts and New Hampshire in which we ceased operations in September 2022, same-facility net operating revenues increased 11.3% as compared to the same period a year ago.
Removed
As the vaccination clinics progressed and as the vaccine became more accessible, we began to see a significant decline in COVID-19 cases among our operations, as well as a significant decrease in the adverse health events related to COVID.
Added
The increase in non-GAAP earnings for the year ended December 31, 2023 compared to the same period in the prior year was primarily due to the continued occupancy increase in our skilled nursing facilities, skilled nursing per diem increases from some of our government payors, and the continued reduction of nurse agency staffing expense within our operations.
Removed
Despite the COVID-19 cases and adverse health events from COVID declining, our operating expenses have remained elevated with incentive compensation being paid to attract and retain frontline partners, as well as increased costs of personal protective equipment (“PPE”), sanitizers and cleaning supplies, and COVID-19 testing of our patients and partners.
Added
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 $25,821,000 in net patient revenues for the year ended December 31, 2023 compared to the same period last year.
Removed
Despite the continued disruption of COVID-19 to our operations, our capital and financial resources, including our overall liquidity, remain strong. Our liquidity provides us with significant flexibility to maintain the strength of our balance sheet in periods of uncertainty or stress.
Added
In 2023, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new entity. The fair value of the land contributed to the entity was $8,000,000 and the related cost basis in the land was $1,770,000, which resulted in a gain of $6,230,000.
Removed
At this time, we are not able to quantify the impact that the COVID-19 pandemic will have on our future financial results. We have received and may continue to receive payments and advances from the various federal and state initiatives.
Added
Salaries, wages, and benefits increased $26,175,000, or 3.8%, to $712,344,000 from $686,169,000. Salaries, wages, and benefits as a percentage of net operating revenues and grant income was 62.4% compared to 63.2% for the years ended December 31, 2023 and 2022, respectively. We continue to face workforce and labor shortages within all of our operations.
Removed
In the second quarter of 2020, we received approximately $51,253,000 as part of this program. These funds began to be applied against claims for services provided to Medicare patients after approximately one year from the date we received the funds. The Company repaid $36,231,000 of the funds in 2021 and the remaining $15,022,000 of the funds in 2022.
Added
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.
Removed
The CARES Act and subsequent related legislation temporarily suspended Medicare sequestration beginning May 1, 2020 through March 31, 2022. The Medicare sequestration policy reduces fee-for-service Medicare payments by 2 percent. Beginning April 1, 2022, the sequestration reductions were 1% from April 1, 2022 through June 30, 2022. The full 2% reduction went back into effect July 1, 2022.
Added
For the year ended December 31, 2023 our agency nurse staffing expenses decreased $30,682,000, or approximately 44.5%, compared to the same period a year ago.
Removed
The CARES Act extends the sequestration policy through 2030 in exchange for this temporary suspension, which the sequestration reduction for 2030 has been increased up to 3%.
Added
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 in salaries, wages, and benefits of $13,565,000 for the year ended December 31, 2023 compared to the same period last year.
Removed
The CARES Act also temporarily permitted employers to defer the deposit and payment of the employer’s portion of the social security taxes (6.2% of employee wages) that otherwise would have been due between March 27, 2020 and December 31, 2020.
Added
In September 2022, the Company transferred the operations of seven skilled nursing facilities located in Massachusetts and New Hampshire, which resulted in salaries, wages, and benefits decreasing $31,920,000 for the year ended December 31, 2023 compared to the same period last year.
Removed
The provision requires that the deferred taxes be paid over a two-year period with half the amount required to be paid by December 31, 2021, and the other half by December 31, 2022. The Company paid $10,613,000 during the year ended December 31, 2021 and the remaining $10,545,000 during the year ended December 31, 2022.
Added
The ten new operations listed above attributed to an increase in other operating expenses of $9,082,000 for the year ended December 31, 2023 compared to the same period last year.
Removed
The decline in census is due to COVID-19 and the lack of new admissions from our acute care providers and referral partners, and the difficult workforce and labor environment that has limited our admissions during phases of 2021. The composite skilled nursing facility per diem increased 2.4% in 2021 compared to 2020.
Added
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 $15,025,000 for the year ended December 31, 2023 compared to the prior year.
Removed
In June 2021, the Company acquired the remaining ownership interest in Caris, which resulted in net patient revenues increasing $39,746,000 for the year ended December 31, 2021 compared to 2020. Our homecare operations had an increase in net patient revenues of approximately $5,007,000 for the year ended December 31, 2021 compared to 2020.
Added
Other income Non–operating income increased by $5,519,000, or 49.5% to $16,660,000 compared to the prior year, as further detailed in Note 5 to our consolidated financial statements. We recorded unrealized gains in the amount of $14,944,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed6 unchanged
Biggest changeAt December 31, 2022, the credit quality ratings for our fixed income portfolio consisted of the following investment and non-investment grades (as a percent of fair value): 41% AAA rated, 10% AA rated, 37% A rated, 10% BBB rated, and 2% BB rated.
Biggest changeAt December 31, 2023, the credit quality ratings for our fixed income portfolio consisted of the following investment and non-investment grades (as a percent of fair value): 7% AAA rated, 42% AA rated, 38% A rated, 12% BBB rated, and 1% BB rated.
Credit Risk Credit risk is managed by diversifying the fixed income portfolio to avoid concentrations in any single industry group or issuer and by limiting investments in securities with lower credit ratings. Corporate debt securities and asset–backed securities comprise approximately 62% of the fair value of the fixed income portfolio.
Credit Risk Credit risk is managed by diversifying the fixed income portfolio to avoid concentrations in any single industry group or issuer and by limiting investments in securities with lower credit ratings. Corporate debt securities and asset–backed securities comprise approximately 60% of the fair value of the fixed income portfolio.
Additionally, the fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, the liquidity of the instrument and other general market conditions. At December 31, 2022, we have available for sale marketable debt securities in the amount of $142,647,000.
Additionally, the fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, the liquidity of the instrument and other general market conditions. At December 31, 2023, we have available for sale marketable debt securities in the amount of $127,727,000.
Equity Price and Concentration Risk Our marketable equity securities are recorded at their fair market value based on quoted market prices. Thus, there is exposure to equity price risk, which is the potential change in fair value due to a change in quoted market prices. At December 31, 2022, the fair value of our marketable equity securities is approximately $123,144,000.
Equity Price and Concentration Risk Our marketable equity securities are recorded at their fair market value based on quoted market prices. Thus, there is exposure to equity price risk, which is the potential change in fair value due to a change in quoted market prices. At December 31, 2023, the fair value of our marketable equity securities is approximately $137,896,000.
Our investment in NHI comprises approximately $85,152,000, or 69.2%, of the total fair value of our marketable equity securities. We manage our exposure to NHI by closely monitoring the financial condition, performance, and outlook of the company.
Our investment in NHI comprises approximately $91,071,000, or 66.0%, of the total fair value of our marketable equity securities. We manage our exposure to NHI by closely monitoring the financial condition, performance, and outlook of the company.
Of the total unrealized gains in our marketable equity securities, approximately $60,418,000 is related to our investment in NHI. 41 Table of Contents
Of the total unrealized gains in our marketable equity securities, approximately $66,337,000 is related to our investment in NHI. 40 Table of Contents
Hypothetically, a 10% change in quoted market prices would result in a related increase or decrease in the fair value of our equity investments of approximately $12,314,000. At December 31, 2022, our equity securities had net unrealized gains of $68,642,000.
Hypothetically, a 10% change in quoted market prices would result in a related increase or decrease in the fair value of our equity investments of approximately $13,790,000. At December 31, 2023, our equity securities had net unrealized gains of $83,586,000.

Other NHC 10-K year-over-year comparisons