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What changed in NATIONAL HEALTHCARE CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NATIONAL HEALTHCARE CORP's 2024 and 2025 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 2025 report.

+164 added−182 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-28)

Top changes in NATIONAL HEALTHCARE CORP's 2025 10-K

164 paragraphs added · 182 removed · 133 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+6 added−15 removed69 unchanged
Biggest changeThe ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees. The qualified wages and health insurance benefits paid by the Company were related to the second, third, and fourth quarters of 2020. All conditions related to the ERC were met during 2024.
Biggest changeThe qualified wages and health insurance benefits paid by the Company were related to the second, third, and fourth quarters of 2020. All conditions related to the ERC were met during 2024. The Company recorded $9,445,000 of government stimulus income related to the ERC credit for the year ended December 31, 2024. Non – Operating Income.
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 (two male and four female) full–time individuals in this program. Six of our seven regional vice presidents and 59 of our 80 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 four (two male and two female) full–time individuals in this program. Six of our seven regional vice presidents and 59 of our 80 health care center administrators are graduates of this program.
Charges for services are paid from private sources without assistance from governmental programs. Independent living facilities may be licensed and regulated in some states, but do not require the issuance of a CON such as is required for skilled nursing facilities. We have, in several cases, developed independent living facilities adjacent to our nursing facilities.
Charges for services are paid from private sources without assistance from governmental programs. Independent living facilities may be licensed and regulated in some states, but do not require the issuance of a CON as is required for skilled nursing facilities. We have, in several cases, developed independent living facilities adjacent to our nursing facilities.
In addition, the manner and extent to which the assisted living industry is regulated at federal and state levels are evolving. 6 Table of Contents In all states in which we operate, before a skilled nursing facility can make a capital expenditure exceeding certain specified amounts or construct any new skilled health care beds, approval of the state health care regulatory agency or agencies must be obtained, and a Certificate of Need issued.
In addition, the manner and extent to which the assisted living industry is regulated at federal and state levels are evolving. 6 In all states in which we operate, before a skilled nursing facility can make a capital expenditure exceeding certain specified amounts or construct any new skilled health care beds, approval of the state health care regulatory agency or agencies must be obtained, and a Certificate of Need issued.
We generate non–operating income from equity in earnings of unconsolidated investments, dividends and realized gains and losses on marketable securities, interest income, and other miscellaneous non–operating income. 4 Table of Contents Quality of Patient Care The Centers for Medicare and Medicaid Services (“CMS”) introduced the Five-Star Quality Rating System to help consumers, their families and caregivers compare skilled nursing facilities more easily.
We generate non–operating income from equity in earnings of unconsolidated investments, dividends and realized gains and losses on marketable securities, interest income, and other miscellaneous non–operating income. 4 Quality of Patient Care The Centers for Medicare and Medicaid Services (“CMS”) introduced the Five-Star Quality Rating System to help consumers, their families and caregivers compare skilled nursing facilities more easily.
We also offer intensive outpatient programs with individualized treatment plans based on the patient's clinical needs. 3 Table of Contents ● Homecare Agencies . Our home health agencies (“homecares”) assist those who wish to stay at home or in assisted living residences but still require some degree of medical care or assistance with daily activities.
We also offer intensive outpatient programs with individualized treatment plans based on the patient's clinical needs. 3 ● Homecare Agencies . Our home health agencies (“homecares”) assist those who wish to stay at home or in assisted living residences but still require some degree of medical care or assistance with daily activities.
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 community. Government Grant 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 community. 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, 2024 and for the fiscal year 2025, 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, 2025 and for the fiscal year 2026, the state of Tennessee implemented specific individual nursing facility increases.
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, 2024, we operated five regional pharmacy locations (two locations each in Tennessee and South Carolina and one location in 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, 2025, we operated five regional pharmacy locations (two locations each in Tennessee and South Carolina and one location in Missouri).
The Company also reports an “all other” category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office. See Note 6 in the notes to the consolidated financial statements for further disclosure of the Company’s operating segments.
The Company also reports an “all other” category that includes revenues from rental income, management and accounting services fees, insurance services, and costs of the corporate office. See Note 5 in the notes to the consolidated financial statements for further disclosure of the Company’s operating segments.
Also, to foster a stronger sense of ownership, we offer an Employee Stock Purchase Plan where partners may purchase company stock through payroll deductions. 9 Table of Contents We face competition in employing and retaining nurses, technicians, aides, and other high-quality professional and non–professional employees.
Also, to foster a stronger sense of ownership, we offer an Employee Stock Purchase Plan where partners may purchase company stock through payroll deductions. 9 We face competition in employing and retaining nurses, technicians, aides, and other high-quality professional and non–professional employees.
We provide hospice care through Caris Healthcare (“Caris”), a wholly owned subsidiary of NHC. Caris specializes in providing hospice and palliative care to over 1,514 patients per day in 33 locations in Georgia, Missouri, South Carolina, Tennessee, and Virginia.
We provide hospice care through Caris Healthcare (“Caris”), a wholly owned subsidiary of NHC. Caris specializes in providing hospice and palliative care to over 1,647 patients per day in 33 locations in Georgia, Missouri, South Carolina, Tennessee, and Virginia.
Securities and Exchange Commission ("SEC"). The SEC maintains a website that contains these reports as well as proxy statements and other information regarding issuers that file electronically. The SEC's website is at www.sec.gov. NHC's website and its content are not deemed incorporated by reference into this report. 10 Table of Contents
Securities and Exchange Commission ("SEC"). The SEC maintains a website that contains these reports as well as proxy statements and other information regarding issuers that file electronically. The SEC's website is at www.sec.gov. NHC's website and its content are not deemed incorporated by reference into this report. 10
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 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates and policy changes for skilled nursing facilities, which began on October 1, 2024.
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 In July 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates and policy changes for skilled nursing facilities, which began on October 1, 2025.
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 2024. Most of our rehabilitative services are for patients in our owned, leased 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 1,230 highly trained, professional therapists in 2025. Most of our rehabilitative services are for patients in our owned, leased and managed skilled nursing facilities.
However, we also provide services to 50 additional health care providers. Our rates for these services are competitive with other market rates. ● Medical Specialty Units.
However, we also provide services to 48 additional health care providers. Our rates for these services are competitive with other market rates. ● Medical Specialty Units.
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, 2024, the I-SNP operated in the states of Tennessee, Missouri, and South Carolina with approximately 1,200 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, 2025, the I-SNP operated in the states of Tennessee, Missouri, and South Carolina with approximately 1,300 members enrolled in the plan. Other Revenues.
Description of the Business The following table summarizes our operations by ownership status as of December 31, 2024: Owned Leased Managed Total Skilled Nursing Facilities Number of facilities 43 29 8 80 Percentage of total 53.7% 36.3% 10.0% 100.0% Licensed beds 5,503 3,859 979 10,341 Percentage of total 53.2% 37.3% 9.5% 100.0% Assisted Living Facilities Number of facilities 19 5 2 26 Percentage of total 73.1% 19.2% 7.7% 100.0% Units 1,309 70 34 1,413 Percentage of total 92.6% 5.0% 2.4% 100.0% Independent Living Facilities Number of facilities 5 3 1 9 Percentage of total 55.6% 33.3% 11.1% 100.0% Retirement apartments 396 245 136 777 Percentage of total 51.0% 31.5% 17.5% 100.0% Behavioral Health Hospitals Number of facilities 3 – – 3 Percentage of total 100.0% – – 100.0% Licensed beds 102 – – 102 Percentage of total 100.0% – – 100.0% Homecare Agencies 34 – – 34 Hospice Agencies 33 – – 33 2 Table of Contents Net Patient Revenues.
Description of the Business The following table summarizes our operations by ownership status as of December 31, 2025: Owned Leased Managed Total Skilled Nursing Facilities Number of facilities 43 29 8 80 Percentage of total 53.7% 36.3% 10.0% 100.0% Licensed beds 5,485 3,865 979 10,329 Percentage of total 53.1% 37.4% 9.5% 100.0% Assisted Living Facilities Number of facilities 19 5 2 26 Percentage of total 73.1% 19.2% 7.7% 100.0% Units 1,309 70 34 1,413 Percentage of total 92.6% 5.0% 2.4% 100.0% Independent Living Facilities Number of facilities 5 3 1 9 Percentage of total 55.6% 33.3% 11.1% 100.0% Retirement apartments 396 245 136 777 Percentage of total 51.0% 31.5% 17.5% 100.0% Behavioral Health Hospitals Number of facilities 3 – – 3 Percentage of total 100.0% – – 100.0% Licensed beds 102 – – 102 Percentage of total 100.0% – – 100.0% Homecare Agencies 34 – – 34 Hospice Agencies 33 – – 33 2 Net Patient Revenues.
As of December 31, 2024, we perform management services for eleven healthcare facilities and accounting and financial services for 15 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.
As of December 31, 2025, we perform management services for eleven healthcare facilities and accounting and financial services for 14 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.
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 2024, the rate of occupancy was 93.2% compared to 89.0% in 2023. ● Behavioral Health Hospitals.
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 2025, the rate of occupancy was 93.8% compared to 93.2% in 2024. ● Behavioral Health Hospitals.
Our goal is to link our skilled nursing facilities with our senior living communities, home health operations, hospice operations, and behavioral health hospitals; therefore, obtaining a competitive advantage for our operations. Human Capital Employees As of December 31, 2024, we had 14,962 full-time and part-time employees (“partners”), mainly through our Administrative Services Contractor (National Health Corporation).
Our goal is to link our skilled nursing facilities with our senior living communities, home health operations, hospice operations, and behavioral health hospitals; therefore, obtaining a competitive advantage for our operations. Human Capital Employees As of December 31, 2025, we had 15,278 full-time and part-time employees (“partners”), mainly through our Administrative Services Contractor (National Health Corporation).
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 2024, 3.5% 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.
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 year 2025, 3.2% 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.
Included in this final rule are new comprehensive minimum nurse staffing requirements, which aim to significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities.
Included in this final rule were new comprehensive minimum nurse staffing requirements, which aimed to significantly reduce the risk of residents receiving unsafe and low-quality care within LTC facilities.
The following table sets forth sources of net patient revenues for the periods indicated: Year Ended December 31, Source 2024 2023 2022 Medicare 33% 34% 37% Managed Care 10% 10% 10% Medicaid 29% 30% 28% Private Pay and Other 28% 26% 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 2025 2024 2023 Medicare 31% 33% 34% Managed Care 12% 10% 10% Medicaid 30% 29% 30% Private Pay and Other 27% 28% 26% Total 100% 100% 100% We attempt to attract an increasing percentage of Medicare and private pay patients by providing rehabilitative and other post–acute care services.
This increase reflects a 2.7% home health payment update, reduced by a 1.8% decrease that reflects the permanent behavior adjustment and an estimated 0.4% decrease that reflects the updated fixed-dollar loss ratio for outlier payments.
This increase reflects a 2.4% home health payment update, reduced by a 0.9% decrease that reflects the final permanent adjustment, an estimated 2.7% decrease that reflects the final temporary adjustment, and a 0.1% decrease that reflects the updated fixed-dollar loss ratio for outlier payments.
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, 2024 2023 2022 Overall census 88.6% 87.9% 83.8% ● Rehabilitative Services.
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, 2025 2024 2023 Overall census 89.7% 88.6% 87.9% ● Rehabilitative Services.
For the years ended December 31, 2024, 2023 and 2022, we have recorded $12,749,000, $20,214,000 and $19,442,000, 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, 2025, 2024 and 2023, we have recorded $7,246,000, $12,749,000 and $20,214,000, respectively, due to these supplemental Medicaid payments. We have recorded these payments in net patient revenues in our consolidated statements of operations.
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 2024, the rate of occupancy was 81.1% compared to 78.5% in 2023.
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 2025, the rate of occupancy was 84.3% compared to 81.1% in 2024.
The fiscal year 2025 rule equates to a net 4.2% increase in Medicare Part A payments to SNFs in fiscal year 2025 compared to 2024 levels. The rule includes a market basket increase of 3.0%, an increase of 1.7% to the market basket forecast error adjustment, and a negative 0.5% productivity adjustment.
The fiscal year 2026 rule equates to a net 3.2% increase in Medicare Part A payments to SNFs in fiscal year 2026 compared to 2025 levels. The rule includes a market basket increase of 3.3%, an increase of 0.6% to the market basket forecast error adjustment, and a negative 0.7% productivity adjustment.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of December 31, 2024: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 80 Number of 4 and 5-star rated skilled nursing facilities 46 Percentage of 4 and 5-star rated skilled nursing facilities 57% 35% Average rating for all skilled nursing facilities, end of period 3.6 2.8 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, 2025: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 80 Number of 4 and 5-star rated skilled nursing facilities 50 Percentage of 4 and 5-star rated skilled nursing facilities 62.5% 38.6% Average rating for all skilled nursing facilities, end of period 3.83 2.95 Development and Growth We are undertaking to expand our post–acute and senior health care operations while protecting our existing operations and markets.
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 2024, we served an average census of 3,409 patients and provided 311,520 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 2025, we served an average census of 3,834 patients and provided 339,344 visits. ● Hospice Agencies .
The FY2025 hospice payment update also includes an update to the statutory aggregate cap amount, which limits the overall payments per patient that are made annually. The cap amount for FY2025 is $34,465. 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 FY2026 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 hospice cap amount for FY2026 is $35,361. 8 Medicaid Legislation and Regulations Skilled Nursing Facilities State Medicaid plans subject to budget constraints are of particular concern to us.
The services we provide include a comprehensive range of health care services. In fiscal 2024, 95.7% of our net operating revenues were derived from such health care services. Highlights of health care services activities during 2024 were as follows: ● Skilled Nursing Facilities.
The services we provide include a comprehensive range of health care services. In fiscal year 2025, 96.8% of our net operating revenues were derived from such health care services. Highlights of health care services activities during 2025 were as follows: ● Skilled Nursing Facilities.
Upon CMS' approval, we estimate the resulting increase in revenue for the 2025 fiscal year will be approximately $6,600,000 annually, or $1,650,000 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 healthcare workforce crisis.
We estimate the resulting increase in revenue for the 2026 fiscal year will be approximately $4,200,000 annually, or $1,050,000 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 healthcare workforce crisis.
The White Oak portfolio consists of 15 skilled nursing facilities, two assisted living facilities, and four independent living facilities. The White Oak operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina.
(“White Oak”). The White Oak portfolio consisted of 15 skilled nursing facilities, two assisted living facilities, four independent living facilities and a long-term care pharmacy. The White Oak operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina.
Competition In most of the communities in which we operate health care facilities, we compete with other health care facilities in the area. There are hundreds of operators of post-acute healthcare services in each of these states and no single operator, including us, dominates any of the markets, except for some small rural markets which might have limited competition.
There are hundreds of operators of post-acute healthcare services in each of these states and no single operator, including us, dominates any of the markets, except for some small rural markets which might have limited competition.
We do not expect the loss of a single customer or group of related customers would have a material adverse effect. 5 Table of Contents Certain groups of patients receive funds to pay the cost of their care from a common source.
Customers and Sources of Revenues No individual customer, or related group of customers, accounts for a significant portion of our revenues. We do not expect the loss of a single customer or group of related customers would have a material adverse effect. 5 Certain groups of patients receive funds to pay the cost of their care from a common source.
Medicare and Medicaid Participation All skilled nursing facilities, owned, leased or managed by us are certified to participate in Medicare. All but eight (seven owned and one managed) of our affiliated skilled nursing facilities participate in Medicaid. All our homecare and hospice agencies participate in the Medicare and Medicaid programs, with Medicare comprising the majority of their revenue.
All but eight (seven owned and one managed) of our affiliated skilled nursing facilities participate in Medicaid. All our homecare and hospice agencies participate in the Medicare and Medicaid programs, with Medicare comprising the majority of their revenue. Our behavioral health hospitals also participate in the Medicare and Medicaid program.
Department of Health and Human Services ("HHS") has issued rules that govern our use and disclosure of protected health information. We have established policies and procedures to comply with HIPAA privacy and security requirements. We maintain a company-wide HIPAA compliance plan, that we believe complies with the HIPAA privacy and security regulations.
Department of Health and Human Services ("HHS") has issued rules that govern our use and disclosure of protected health information. We have established policies and procedures to comply with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") privacy and security requirements.
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 Hospice New Agency 1 agency Morristown, TN April 2024 Hospice New Agency 1 agency Lawrenceburg, TN July 2024 Hospice New Agency 1 agency Wytheville, VA August 2024 Hospice New Agency 1 agency Clinton, TN October 2024 On August 1, 2024, the Company purchased the White Oak portfolio, including its long-term care pharmacy.
Type of Operation Description Size Location Placed in Service 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 Hospice New Agency 1 agency Morristown, TN April 2024 Hospice New Agency 1 agency Lawrenceburg, TN July 2024 Hospice New Agency 1 agency Wytheville, VA August 2024 Hospice New Agency 1 agency Clinton, TN October 2024 On August 1, 2024, the Company purchased the assets of White Oak Management, Inc.
While payment for each 30-day period of care is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs. The payment under the Medicare program is also adjusted for certain variables.
There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive. While payment for each 30-day period of care is adjusted to reflect the beneficiary’s health condition and needs, a special outlier provision exists to ensure appropriate payment for those beneficiaries that have the most expensive care needs.
In July 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates. CMS issued a rate increase of 2.9%, or $790 million, effective October 1, 2024. This increase is the result of a 3.4% market basket increase reduced by a 0.5% productivity adjustment.
In August 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates. CMS issued a rate increase of 2.6%, or $750 million, effective October 1, 2025. This increase results from the proposed 3.3% inpatient hospital market basket percentage increase reduced by a proposed 0.7% point productivity adjustment, required by law.
In November 2024, CMS released its final rule outlining fiscal year 2025 Medicare payment rates. CMS projects payments to home health agencies in fiscal year 2025 will increase by 0.5% or $85 million, relative to the prior year.
The payment under the Medicare program is also adjusted for certain variables. In November 2025, CMS released its final rule outlining fiscal year 2026 Medicare payment rates. CMS projects payments to home health agencies in fiscal year 2026 will decrease by 1.3% or $220 million, relative to the prior year.
The HIPAA privacy and security regulations have and will continue to impose significant costs to the Company in order to comply with these standards. Our operations are also subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties for privacy and security breaches.
Our operations are also subject to any federal or state privacy-related laws that are more restrictive than the privacy regulations issued under HIPAA. These laws vary and could impose additional penalties for privacy and security breaches. Medicare and Medicaid Participation All skilled nursing facilities, owned, leased or managed by us are certified to participate in Medicare.
Medicare Legislation and Regulations Skilled Nursing Facilities Medicare is uniform nationwide and reimburses skilled nursing facilities under a fixed payment methodology called the Skilled Nursing Facility Prospective Payment System ("SNF PPS").
There have not been any adjustments that have had a material adverse effect on the Company within the last three years. Medicare Legislation and Regulations Skilled Nursing Facilities Medicare is uniform nationwide and reimburses skilled nursing facilities under a fixed payment methodology called the Skilled Nursing Facility Prospective Payment System ("SNF PPS").
We record as receivables the amounts we ultimately expect to receive under the Medicare and Medicaid programs and record into profit or loss any differences in amounts received at the time of interim or final settlements. There have not been any adjustments that have had a material adverse effect on the Company within the last three years.
During the fiscal years presented, we received payments from Medicare and, if participating, from Medicaid. We record as receivables the amounts we ultimately expect to receive under the Medicare and Medicaid programs and record into profit or loss any differences in amounts received at the time of interim or final settlements.
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.
We received government grant funds as part of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES ACT"). The Employee Retention Credit (“ERC”) was established by the CARES Act and intended to help businesses retain their workforce and avoid layoffs during the pandemic.
The Employee Retention Credit (“ERC”) was established by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and intended to help businesses retain their workforce and avoid layoffs during the pandemic. The ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees.
These non-recurring rate increases will result in an additional increase in revenue for the 2025 fiscal year of approximately $8,200,000 annually, or $2,050,000 per quarter. Effective July 1, 2024 and for the fiscal year 2025, the state of Missouri has proposed specific individual nursing facility increases, subject to approval from CMS.
We estimate the resulting increase in revenue for the 2026 fiscal year will be approximately $3,000,000 annually, or $750,000 per quarter. Effective October 1, 2025 and for the fiscal year 2026, the state of South Carolina has proposed specific individual nursing facility increases.
If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin. There are no limits to the number of periods of care a beneficiary who remains eligible for the home health benefit can receive.
Under PDGM, Medicare provides homecare agencies with payments for each 30-day period of care provided to beneficiaries. If a beneficiary is still eligible for care after the end of the first 30-day payment period, a second 30-day payment period can begin.
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 have partnered with a company to study and identify areas on our properties that would benefit from lighting upgrades as part of our efforts to reduce energy consumption.
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.
Removed
The Company recorded $9,445,000 of government grant income related to the ERC credit for the year ended December 31, 2024. The Company recorded $11,457,000 of government grant income from the Provider Relief Fund for the year ended December 31, 2022. Non – Operating Income.
Added
The following table lists our recent construction and purchase activities.
Removed
The following table lists our recent construction and purchase activities. Type of Operation Description Size Location Placed in Service 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.
Added
We maintain a company-wide HIPAA compliance plan, that we believe complies with the HIPAA privacy and security regulations. The HIPAA privacy and security regulations have and will continue to impose significant costs to the Company in order to comply with these standards.
Removed
Customers and Sources of Revenues No individual customer, or related group of customers, accounts for a significant portion of our revenues.
Added
These figures do not incorporate the SNF Value Based Purchasing (“VBP”) reduction for certain SNFs subject to the net reduction in payments under the SNF VBP; those adjustments are estimated to total $208.4 million in fiscal year 2026. Homecares Medicare is uniform nationwide and reimburses homecare agencies under a Patient-Driven Groupings Model (“PDGM”).
Removed
While there are currently no significant legislative proposals to eliminate Certificates of Need pertaining to skilled nursing care in the states in which we do business, deregulation in the Certificate of Need area would likely result in increased competition and could adversely affect occupancy rates and the supply of licensed and certified personnel.
Added
In addition, CMS is finalizing recalibrated PDGM case-mix weights, updated low-utilization payment adjustment (“LUPA”) thresholds, updated functional impairment levels, and comorbidity adjustment subgroups for 2026. Hospice Medicare payment rates are calculated as daily rates for each of four levels of care we deliver.
Removed
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.
Added
The passage of the One Big Beautiful Bill Act (“OBBB”) in July 2025 prohibited the Health and Human Services (“HHS”) from implementing, administering, or enforcing the Minimum Staffing Rule until October 1, 2034.
Removed
This final rule also changes CMS’ enforcement policies to impose more equitable and consistent civil monetary penalties ("CMPs") for health and safety violations as part of the agency’s ongoing work to increase the safety and care provided in America’s nursing homes.
Added
Furthermore, in December 2025, CMS issued an interim final rule rescinding part of the minimum staffing rule in nursing homes, including the minimum hours per resident day requirement. Competition In most of the communities in which we operate health care facilities, we compete with other health care facilities in the area.
Removed
CMS revised the regulation to expand the type of CMPs that can be imposed to allow for more per instance and per day CMPs to be imposed, as appropriate. The final rule also finalized updates to the SNF Quality Reporting Program ("QRP") to better account for adverse social conditions that negatively impact individuals’ health or healthcare.
Removed
CMS also finalized its proposal to adopt a data validation process for the SNF QRP beginning the same year. Homecares Medicare is uniform nationwide and reimburses homecare agencies under a Patient-Driven Groupings Model (“PDGM”). Under PDGM, Medicare provides homecare agencies with payments for each 30-day period of care provided to beneficiaries.
Removed
As required by the Bipartisan Budget Act of 2018, this rule proposes a permanent prospective adjustment to the CY2025 home health payment rate to account for the impact of implementing the PDGM.
Removed
This adjustment accounts for differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures due to the CY2020 implementation of PDGM and the change to a 30-day unit of payment. Hospice Medicare payment rates are calculated as daily rates for each of four levels of care we deliver.
Removed
We estimate the resulting increase in revenue for the 2025 fiscal year will be approximately $11,000,000 annually, or $2,750,000 per quarter. Additionally, the state of Tennessee implemented non-recurring rate increases for fiscal year 2025 for continued stabilization payments and Medicaid rate rebasing.
Removed
CMS is finalizing a total nurse staffing standard of 3.48 hours per resident day (“HPRD”), which must include at least 0.55 HPRD of direct registered nurse (“RN”) care and 2.45 HPRD of direct nurse aide care.
Removed
Facilities may use any combination of nurse staff (RN, licensed practical nurse and licensed vocational nurse, or nurse aide) to account for the additional 0.48 HPRD needed to comply with the total nurse staffing standard.
Removed
CMS is also finalizing enhanced facility assessment requirements and a requirement to have an RN onsite 24 hours a day, seven days a week (“24/7”), to provide skilled nursing care. The 24/7 RN onsite can be the Director of Nursing; however, they must be available to provide direct resident care.
Removed
This final rule provides a staggered implementation timeframe of the minimum nurse staffing standards and a 24/7 RN requirement based on geographic location, as well as possible exemptions for qualifying facilities for some parts of these requirements based on workforce unavailability and other factors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

20 edited+10 added−3 removed170 unchanged
Biggest changeFor example, CMS reimburses SNF providers using the PDPM, a payment methodology that classifies patients into payment groups based on clinical factors using diagnosis codes rather than by volume of services. In addition, CMS requires SNFs, home health agencies and hospices to report quality data in order to receive full reimbursement.
Biggest changeThe industry trend toward value-based purchasing may negatively impact our revenues. Value-based purchasing programs emphasize quality and efficiency of services, rather than volume of services. For example, CMS reimburses SNF providers using the PDPM, a payment methodology that classifies patients into payment groups based on clinical factors using diagnosis codes rather than by volume of services.
There can be no assurance that payment of such additional amounts upon final adjudication of any disputes will not have a material impact on our results of operations and financial position. 18 Table of Contents Risks Related to Our Structure and Public Company Compliance Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes – Oxley Act could result in a restatement of our financial statements, cause investors to lose confidence in our financial statements and our company and have a material adverse effect on our business and stock price.
There can be no assurance that payment of such additional amounts upon final adjudication of any disputes will not have a material impact on our results of operations and financial position. 18 Risks Related to Our Structure and Public Company Compliance Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes – Oxley Act could result in a restatement of our financial statements, cause investors to lose confidence in our financial statements and our company and have a material adverse effect on our business and stock price.
Acquisitions also involve numerous other risks, including difficulties integrating acquired operations, personnel and information systems, diversion of management's time from existing operations, potential losses of key employees or customers of acquired companies, assumptions of significant liabilities, exposure to unforeseen liabilities of acquired companies and increases in our indebtedness. 13 Table of Contents We cannot assure that we will succeed in obtaining financing for any acquisitions at a reasonable cost or that any financing will not contain restrictive covenants that limit our operating flexibility.
Acquisitions also involve numerous other risks, including difficulties integrating acquired operations, personnel and information systems, diversion of management's time from existing operations, potential losses of key employees or customers of acquired companies, assumptions of significant liabilities, exposure to unforeseen liabilities of acquired companies and increases in our indebtedness. 13 We cannot assure that we will succeed in obtaining financing for any acquisitions at a reasonable cost or that any financing will not contain restrictive covenants that limit our operating flexibility.
Disruptions in the financial markets or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us. 20 Table of Contents In addition, the success of our investment strategies and asset allocations in the fixed–income portfolio may vary depending on the market environment.
Disruptions in the financial markets or a lack of buyers for the specific securities that we are trying to sell, could prevent us from liquidating securities or cause a reduction in prices to levels that are not acceptable to us. 20 In addition, the success of our investment strategies and asset allocations in the fixed–income portfolio may vary depending on the market environment.
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, 2024, we leased or owned 72 skilled nursing facilities, 24 assisted living facilities, three behavioral health hospitals, and eight 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, 2025, we leased or owned 72 skilled nursing facilities, 24 assisted living facilities, three behavioral health hospitals, and eight independent living facilities.
We cannot assure you that the claims we pay under our self–insurance programs will not exceed the reserves we have set aside to pay claims. The number of claims within the self–insured retention may increase. 14 Table of Contents If we fail to compete effectively with other health care providers, our revenues and profitability may decline.
We cannot assure you that the claims we pay under our self–insurance programs will not exceed the reserves we have set aside to pay claims. The number of claims within the self–insured retention may increase. 14 If we fail to compete effectively with other health care providers, our revenues and profitability may decline.
If additional debt is added, the related risks that we now face could intensify. 15 Table of Contents Risks Related to Government Regulation We conduct business in a heavily regulated industry, and changes in, or violations of regulations may result in increased costs or sanctions that reduce our revenue and profitability.
If additional debt is added, the related risks that we now face could intensify. 15 Risks Related to Government Regulation We conduct business in a heavily regulated industry, and changes in, or violations of regulations may result in increased costs or sanctions that reduce our revenue and profitability.
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". 16 Table of Contents Our business may be impacted by healthcare reform efforts. In recent years, the U.S.
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". 16 Our business may be impacted by healthcare reform efforts. In recent years, the U.S.
Failure to maintain proper function and availability of our information systems could have a material adverse effect on our business, financial position, results of operations and liquidity. 19 Table of Contents In addition, certain software supporting our business and information systems are licensed to us by independent software developers.
Failure to maintain proper function and availability of our information systems could have a material adverse effect on our business, financial position, results of operations and liquidity. 19 In addition, certain software supporting our business and information systems are licensed to us by independent software developers.
The privacy, security and breath notification regulations have imposed, and will continue to impose, significant compliance costs on our operations. 17 Table of Contents There are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security concerns. These laws vary and may impose additional obligations or penalties.
The privacy, security and breath notification regulations have imposed, and will continue to impose, significant compliance costs on our operations. 17 There are numerous other laws and legislative and regulatory initiatives at the federal and state levels addressing privacy and security concerns. These laws vary and may impose additional obligations or penalties.
In April 2024, CMS issued the Staffing Rule, establishing minimum staffing standards for SNFs. The Staffing Rule contains three primary staffing requirements which are phased in over the next several years.
In April 2024, CMS issued the Staffing Rule, establishing minimum staffing standards for SNFs. The Staffing Rule contains three primary staffing requirements which would be phased in over the next several years.
Furthermore, there are certain third parties with whom we have contracted to provide services and which we have determined, based on insufficient historical collections and the lack of expected future collections, that the service revenue realization is uncertain.
Furthermore, there are certain third parties with whom we have contracted to provide services and which we have determined, based on insufficient historical collections and the lack of expected future collections, that the service revenue realization is uncertain. We may, therefore, make expenditures related to the provision of services for which we are not paid.
CMS began imposing a 2% reduction on Medicare claims in 2013, and these reductions have been extended through 2030. 11 Table of Contents Net revenue realizable under third–party payor agreements can change after examination and retroactive adjustment by payors during the claims settlement processes or as a result of post–payment audits.
These reductions have been extended through 2030. 11 Net revenue realizable under third–party payor agreements can change after examination and retroactive adjustment by payors during the claims settlement processes or as a result of post–payment audits.
The Health Insurance Portability and Accountability Act of 1996, or ("HIPAA"), requires the use of uniform electronic data transmission standards for healthcare claims and payment transactions submitted or received electronically.
HIPAA requires the use of uniform electronic data transmission standards for healthcare claims and payment transactions submitted or received electronically.
Failure to report quality data or poor performance may negatively impact the amount of reimbursement received. CMS publishes quality measure data online through its Care Compare website, to allow the public to search and compare data for Medicare-certified providers.
In addition, CMS requires SNFs, home health agencies and hospices to report quality data in order to receive full reimbursement. Failure to report quality data or poor performance may negatively impact the amount of reimbursement received. CMS publishes quality measure data online through its Care Compare website, to allow the public to search and compare data for Medicare-certified providers.
CMS posts information on nursing home staffing measures on the Care Compare website including staff turnover rates and weekend staffing levels. This new data has been incorporated into the Nursing Home Five Star Quality Rating System. Although we currently have no collective bargaining agreements with unions at our facilities, there is no assurance this will continue to be the case.
This new data has been incorporated into the Nursing Home Five Star Quality Rating System. Although we currently have no collective bargaining agreements with unions at our facilities, there is no assurance this will continue to be the case.
For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit, imposing Medicare spending reductions of up to 2% per fiscal year, with a uniform percentage across all Medicare programs.
For example, the Budget Control Act of 2011 requires automatic spending reductions to reduce the federal deficit, imposing Medicare spending reductions of up to 2% per fiscal year, with a uniform percentage across all Medicare programs. CMS began imposing a 2% reduction on Medicare claims in 2013, with temporary suspensions and 1% cuts in 2020 – 2022.
CMS continues to increase its quality measure thresholds, which is regularly increased every six months, making it more difficult to achieve upward and five-star ratings. CMS increased its quality measure thresholds in 2022, making it more difficult for facilities to obtain or maintain four-and-five-star ratings. CMS places a strong emphasis on registered nurse (“RN”) staffing.
CMS continues to increase its quality measure thresholds, which is regularly increased every six months, making it more difficult to achieve upward and five-star ratings. CMS places a strong emphasis on registered nurse (“RN”) staffing. CMS posts information on nursing home staffing measures on the Care Compare website including staff turnover rates and weekend staffing levels.
We may, therefore, make expenditures related to the provision of services for which we are not paid. 12 Table of Contents The cost to replace or retain qualified nurses, health care professionals and other key personnel may adversely affect our financial performance, and we may not be able to comply with certain states ’ staffing requirements.
The loss of these facilities or an increase in lease-related expenses could have a material adverse effect on our business, future results of operations, cash flows, financial condition, and liquidity. 12 The cost to replace or retain qualified nurses, health care professionals and other key personnel may adversely affect our financial performance, and we may not be able to comply with certain states ’ staffing requirements.
However, we expect that the Staffing Rule in its current form will have adverse financial consequences upon our business. Disasters and similar events, which may increase as a result of climate change, may seriously harm our business.
Disasters and similar events, which may increase as a result of climate change, may seriously harm our business.
Removed
The industry trend toward value-based purchasing may negatively impact our revenues. There continues to be a growing trend in the healthcare industry among both government and commercial payors toward value-based purchasing of healthcare services. Value-based purchasing programs emphasize quality and efficiency of services, rather than volume of services.
Added
The status of our lease with National Health Investors, Inc. creates uncertainties and risks to our future operations. A significant portion of our skilled nursing and independent living facilities are subject to a long-term Master Agreement to Lease with National Health Investors, Inc. (“NHI”), which we refer to as the Master Lease.
Removed
Due to pending legislation in both the House of Representatives and the Senate, industry litigation filed to dispute the Staffing Rule's validity and enforceability, as well as the long phase-in of the requirements, the exact effects of the Staffing Rule cannot be determined. Future developments may significantly alter or even halt the implementation of the Staffing Rule.
Added
On July 29, 2025, NHI notified us of alleged non-compliance with certain non-monetary provisions of the Master Lease.
Removed
During 2024, we expanded our operations with the acquisition of the White Oak Senior Living portfolio. This growth has placed and will continue to place significant demands on our management resources. Our ability to manage our growth effectively and to successfully integrate this acquisition into our existing business will require us to expand our operation, financial and management information systems.
Added
On September 8, 2025, NHI formally alleged that the tenant under the lease, our wholly owned subsidiary NHC/OP, L.P., is in default as a result of alleged non-compliance with four non-monetary provisions, and indicated that failure to cure the alleged defaults within the applicable cure period would constitute an “Event of Default,” entitling NHI to pursue any remedies available under the agreement, including termination.
Added
We dispute that any default has occurred and we continue to communicate with NHI to resolve these matters. For a further discussion of our response to NHI’s allegations, please see Note 6 - Long-Term Leases to Interim Condensed Consolidated Financial Statements included in this Form 10-Q.
Added
In October 2025, we provided NHI with a notice of our intent to exercise our right to extend the Master Lease for an additional five-year term beginning January 1, 2027.
Added
Under the Master Lease, the base rent for any renewal term is to be the fair rental value of the leased property as negotiated between the parties, without regard to improvements we made voluntarily at our expense. There is no assurance, however, that we will reach agreement with NHI on the base rent or other renewal terms.
Added
Further, if NHI asserts that an “Event of Default” has occurred or raises other objections to our extension notice, NHI may seek to terminate our occupancy of the leased properties.
Added
Failure to resolve the current disputes with NHI or a failure to secure renewal of the Master Lease on acceptable terms could result in the loss of our right to occupy and operate some or all of the affected facilities, or subject us to damages, acceleration of rent, or other remedies in favor of NHI.
Added
Even if a default is ultimately determined not to have occurred, the process of resolving such disputes may result in significant legal and other expenses and could distract management from other priorities.
Added
Implementation of the Staffing Rule was impaired by the passage of the One Big Beautiful Bill Act (“OBBB”) on July 4, 2025, which prohibited HHS from implementing, administering, or enforcing the Staffing Rule until October 1, 2034. Future developments may significantly alter the implementation of the Staffing Rule.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed6 unchanged
Biggest changeLouis NHC HealthCare, Maryland Heights Leased (1) 220 Springfield Springfield Rehabilitation and Health Care Center Owned 146 West Plains NHC HealthCare, West Plains Owned 114 North Carolina Burlington White Oak of Burlington Owned 160 Charlotte White Oak of Charlotte Owned 180 Kings Mountain White Oak of Kings Mountain Owned 154 Shelby White Oak of Shelby Owned 160 Tryon White Oak of Tryon Owned 70 Waxhaw White Oak of Waxhaw Leased 100 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 Columbia White Oak of Columbia Owned 120 Greenwood NHC HealthCare, Greenwood Leased (1) 152 Greenville NHC HealthCare, Greenville Owned 176 Lancaster White Oak of Lancaster Owned 132 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 Newberry White Oak of Newberry Owned 146 North Augusta NHC HealthCare, North Augusta Owned 192 North Charleston White Oak of Charleston Owned 176 Rock Hill White Oak of Rock Hill Owned 141 Spartanburg White Oak of North Grove Owned 132 Spartanburg White Oak of Spartanburg Owned 60 Spartanburg White Oak Estates Owned 88 Sumter NHC HealthCare, Sumter Managed 138 York White Oak of York Owned 109 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 160 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 99 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 20 Osage Beach Osage Beach Center for Cognitive Disorders Owned 18 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 85 Stuart Sodalis Senior Living Stuart Owned 84 Vero Beach Sodalis Senior Living Vero Beach Owned 119 Missouri St.
Biggest changeLouis NHC HealthCare, Maryland Heights Leased (1) 220 Springfield Springfield Rehabilitation and Health Care Center Owned 146 West Plains NHC HealthCare, West Plains Owned 114 North Carolina Burlington White Oak of Burlington Owned 160 Charlotte White Oak of Charlotte Owned 180 Kings Mountain White Oak of Kings Mountain Owned 154 Shelby White Oak of Shelby Owned 160 Tryon White Oak of Tryon Owned 70 Waxhaw White Oak of Waxhaw Leased 100 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 Columbia White Oak of Columbia Owned 120 Greenwood NHC HealthCare, Greenwood Leased (1) 152 Greenville NHC HealthCare, Greenville Owned 176 Lancaster White Oak of Lancaster Owned 132 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 Newberry White Oak of Newberry Owned 146 North Augusta NHC HealthCare, North Augusta Owned 192 North Charleston White Oak of Charleston Owned 176 Rock Hill White Oak of Rock Hill Owned 141 Spartanburg White Oak of North Grove Owned 132 Spartanburg White Oak of Spartanburg Owned 60 Spartanburg White Oak Estates Owned 88 Sumter NHC HealthCare, Sumter Managed 138 York White Oak of York Owned 109 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 22 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 160 Knoxville Holston Health & Rehabilitation Center Owned 94 Knoxville NHC HealthCare, Knoxville Owned 115 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 99 Virginia Bristol NHC HealthCare, Bristol Leased (1) 120 23 Behavioral Health Hospitals State City Center Name Affiliation Licensed Beds Missouri Maryland Heights Maryland Heights Center for Behavioral Health Owned 20 Osage Beach Osage Beach Center for Cognitive Disorders Owned 18 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 85 Stuart Sodalis Senior Living Stuart Owned 84 Vero Beach Sodalis Senior Living Vero Beach Owned 119 Missouri St.
Peters Memory Care Owned 60 North Carolina Tryon Benson Hall Assisted Living Owned 18 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 Spartanburg White Oak Estates Assisted Living Owned 30 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 Memory Care Owned 60 North Carolina Tryon Benson Hall Assisted Living Owned 18 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 Spartanburg White Oak Estates Assisted Living Owned 30 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 24 Retirement Apartments State City Retirement Apartments Affiliation Units Missouri 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 Pulaski NHC HomeCare of Pulaski Somerville NHC HomeCare of Somerville Sparta NHC HomeCare of Sparta Springfield NHC HomeCare of Springfield 24 Table of Contents Hospice Agencies State City Hospice Agencies Georgia Rossville Caris Healthcare – Rossville Missouri 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 Pulaski NHC HomeCare of Pulaski Somerville NHC HomeCare of Somerville Sparta NHC HomeCare of Sparta Springfield NHC HomeCare of Springfield 25 Hospice Agencies State City Hospice Agencies Georgia Rossville Caris Healthcare – Rossville Missouri St.
The Company owns 65% of the operations entity and owns 89% of the real estate entity. 25 Table of Contents
The Company owns 65% of the operations entity and owns 89% of the real estate entity. 26

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+2 added−9 removed6 unchanged
Biggest changeIt is possible that claims against us could exceed our coverage limits and our reserves, which would have a material adverse effect on our financial position, results of operations and cash flows. General Litigation Qui Tam Litigation United States of America, ex rel. Jennifer Cook and Sally Gaither v.
Biggest changeIt is possible that claims against us could exceed our coverage limits and our reserves, which would have a material adverse effect on our financial position, results of operations and cash flows. General Litigation Civil Investigative Demand / Qui Tam Complaint On or about May 21, 2024, Caris Healthcare, L.P. (“Caris”) received a Civil Investigative Demand (“CID”) from the U.S.
Attorney’s Office for the Eastern District of Tennessee. The CID requests the production of certain medical records for patients at Caris’ Nashville office and other documents related to the billing for hospice services for the period of January 1, 2019, through the date of the CID.
Attorney’s Office for the Eastern District of Tennessee. The CID requested the production of certain medical records for patients at Caris’ Nashville office and other documents related to the billing for hospice services for the period of January 1, 2019, through the date of the CID. The Company cooperated with respect to the requests.
The Company is cooperating with respect to the requests and remains in the process of responding to the CID. Indemnities From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims.
Indemnities From time to time, the Company enters into certain types of contracts that contingently require it to indemnify parties against third-party claims.
Removed
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.
Added
On June 23, 2025, a Notice of Election to Decline Intervention (the “Notice of Declination”) was filed by the United States of America, the State of Tennessee, the Commonwealth of Virginia, and the State of Georgia, in a case styled U.S. ex rel. Marshall v. Caris HealthCare, L.P., Case No. 3:23-CV-00330, in the U.S.
Removed
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.
Added
District Court for the Eastern District of Tennessee (the “Qui Tam Case”). Subsequent to the Notice of Declination filing, an underlying qui tam complaint, originally filed on September 12, 2023, was unsealed. Following the Notice of Declination, the relators filed a Notice of Voluntary Dismissal on September 25, 2025, which concluded the matter.
Removed
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.
Removed
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.
Removed
As a result, NHC Healthcare/Moulton, LLC renewed its motion to dismiss.
Removed
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.
Removed
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.
Removed
The time period for the Plaintiffs to file a Petition for a Writ of Certiorari with the United States Supreme Court has expired making the Order affirming dismissal issued by the Eleventh Circuit final. Civil Investigative Demand On or about May 21, 2024, Caris Healthcare, L.P. (“Caris”) received a Civil Investigative Demand (“CID”) from the U.S.
Removed
Consequently, because no specific indemnity claims have been asserted, no liabilities have been recorded for these obligations on the consolidated balance sheets for any of the periods presented.

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 631,242 $ 74.73 1,503,127 Equity compensation plans not approved by security holders – – – Total 631,242 $ 74.73 1,503,127 27 Table of Contents The following graph and chart compare the cumulative total stockholder return for the period from January 1, 2020 through December 31, 2024 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 647,975 $ 82.53 1,272,632 Equity compensation plans not approved by security holders – – – Total 647,975 $ 82.53 1,272,632 28 The following graph and chart compare the cumulative total stockholder return for the period from January 1, 2021 through December 31, 2025 on an investment of $100 in (i) NHC’s common stock (“NHC”), (ii) the Russell 2000 Stock Index ("Russell 2000") and (iii) the Standard & Poor’s Health Care Index ("S&P Health Care Index").
Cumulative total stockholder return assumes the reinvestment of all dividends. Stock price performances shown in the graph are not necessarily indicative of future price performances. 28 Table of Contents ITEM 6. [RESERVED]
Cumulative total stockholder return assumes the reinvestment of all dividends. Stock price performances shown in the graph are not necessarily indicative of future price performances. 29 ITEM 6. [RESERVED]
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, 2024, NHC had approximately 19,080 stockholders, comprised of approximately 1,880 stockholders of record and an additional 17,200 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, 2025, NHC had approximately 24,596 stockholders, comprised of approximately 1,896 stockholders of record and an additional 22,700 stockholders indicated by security position listings.
Stock Repurchase Programs In 2024, the Company purchased 133,151 shares of its common stock for a total cost of $13,502,000. The shares were funded from cash on hand and were cancelled and returned to the status of authorized but unissued.
Stock Repurchase Programs In 2025, the Company purchased 127,338 shares of its common stock for a total cost of $14,730,000. 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, 2024 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 1,111,300 $ 140,459 $ – $ 1,251,759 Other revenues 1,315 – 44,863 46,178 Government grant income – – 9,445 9,445 Net operating revenues and grant income 1,112,615 140,459 54,308 1,307,382 Costs and Expenses: Salaries, wages and benefits 668,029 85,712 57,189 810,930 Other operating 280,867 25,927 14,596 321,390 Facility rent 33,787 2,295 7,100 43,182 Depreciation and amortization 37,988 737 3,260 41,985 Interest 4,135 – – 4,135 Total costs and expenses 1,024,806 114,671 82,145 1,221,622 Income (loss) before non-operating income 87,809 25,788 (27,837 ) 85,760 Non-operating income – – 19,690 19,690 Unrealized gains on marketable equity securities – – 30,958 30,958 Income before income taxes $ 87,809 $ 25,788 $ 22,811 $ 136,408 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 32,542 2,172 6,811 41,525 Depreciation and amortization 38,172 786 3,076 42,034 Interest 324 – – 324 Total costs and expenses 914,876 107,097 62,437 1,084,410 Income (loss) before non-operating income 42,342 24,440 (9,648 ) 57,134 Non-operating income – – 16,660 16,660 Unrealized gains on marketable equity securities – – 14,944 14,944 Income before income taxes $ 42,342 $ 24,440 $ 21,956 $ 88,738 32 Table of Contents 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 grant 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 32,526 2,327 6,124 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 901,673 107,025 45,144 1,053,842 Income before non-operating income 10,151 21,829 (84 ) 31,896 Non-operating income – – 11,141 11,141 Unrealized losses on marketable equity securities – – (15,806 ) (15,806 ) Income (loss) before income taxes $ 10,151 $ 21,829 $ (4,749 ) $ 27,231 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. 31 The following tables set forth the Company’s consolidated statements of operations by business segment (in thousands ): Year Ended December 31, 2025 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 1,315,545 $ 154,086 $ – $ 1,469,631 Other revenues 1,467 – 46,683 48,150 Net operating revenues 1,317,012 154,086 46,683 1,517,781 Costs and Expenses: Salaries, wages and benefits 775,477 93,535 52,068 921,080 Other operating 336,746 27,537 12,919 377,202 Facility rent 35,972 2,373 7,882 46,227 Depreciation and amortization 41,066 581 3,273 44,920 Total costs and expenses 1,189,261 124,026 76,142 1,389,429 Income (loss) from operations 127,751 30,060 (29,459 ) 128,352 Non-operating income – – 18,107 18,107 Interest expense (6,371 ) – – (6,371 ) Unrealized gains on marketable equity securities – – 22,344 22,344 Income before income taxes $ 121,380 $ 30,060 $ 10,992 $ 162,432 Year Ended December 31, 2024 Inpatient Services Homecare and Hospice All Other Total Revenues: Net patient revenues $ 1,111,300 $ 140,459 $ – $ 1,251,759 Other revenues 1,315 – 44,863 46,178 Government stimulus income – – 9,445 9,445 Net operating revenues and stimulus income 1,112,615 140,459 54,308 1,307,382 Costs and Expenses: Salaries, wages and benefits 668,029 85,712 57,189 810,930 Other operating 280,867 25,927 14,596 321,390 Facility rent 33,787 2,295 7,100 43,182 Depreciation and amortization 37,988 737 3,260 41,985 Total costs and expenses 1,020,671 114,671 82,145 1,217,487 Income (loss) from operations 91,944 25,788 (27,837 ) 89,895 Non-operating income – – 19,690 19,690 Interest expense (4,135 ) – – (4,135 ) Unrealized gains on marketable equity securities – – 30,958 30,958 Income before income taxes $ 87,809 $ 25,788 $ 22,811 $ 136,408 32 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 32,542 2,172 6,811 41,525 Depreciation and amortization 38,172 786 3,076 42,034 Total costs and expenses 914,552 107,097 62,437 1,084,086 Income (loss) from operations 42,666 24,440 (9,648 ) 57,458 Non-operating income – – 16,660 16,660 Interest expense (324 ) – – (324 ) Unrealized gains on marketable equity securities – – 14,944 14,944 Income before income taxes $ 42,342 $ 24,440 $ 21,956 $ 88,738 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, 2025, 2024 and 2023.
The exiting of these operations resulted in other operating expenses decreasing $7,101,000 for the year ended December 31, 2024 compared to the prior year. We continue to face inflationary pressures in certain categories within other operating expenses as well, such as food/dietary supplies and drugs/pharmaceutical supplies. Facility rent expense increased $1,657,000, or 4.0%, to $43,182,000.
The exiting of these operations resulted in other operating expenses decreasing $7,101,000 for the year ended December 31, 2024 compared to the prior year. We continue to face inflationary pressures in certain categories within other operating expenses as well, such as food/dietary supplies and drugs/pharmaceutical supplies. Facility rent expense increased $1,657,000, or 4.0%, to $43,182,000 in 2024.
Depreciation and amortization decreased 0.1% to $41,985,000. Interest expense increased $3,811,000 to $4,135,000 in 2024 from $324,000 in 2023. At December 31, 2024, we have outstanding long-term debt of $137,000,000 due to the White Oak acquisition. In 2023, we didn't have any outstanding long-term debt.
Depreciation and amortization decreased 0.1% to $41,985,000 in 2024. Interest expense increased $3,811,000 to $4,135,000 in 2024 from $324,000 in 2023. At December 31, 2024, we have outstanding long-term debt of $137,000,000 due to the White Oak acquisition. In 2023, we didn't have any outstanding long-term debt.
Other income Non–operating income increased by $3,030,000, or 18.2% to $19,690,000 compared to the prior year, as further detailed in Note 5 to our consolidated financial statements. We recorded unrealized gains in the amount of $30,958,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2024.
Other income Non–operating income increased by $3,030,000, or 18.2% to $19,690,000 in 2024 compared to the prior year, as further detailed in Note 5 to our consolidated financial statements. We recorded unrealized gains in the amount of $30,958,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2024.
Excluding the unrealized gains and losses in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $76,862,000 for the year ended December 31, 2024 compared to $54,934,000 for the same period a year ago.
Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $76,862,000 for the year ended December 31, 2024 compared to $54,934,000 for the same period a year ago.
We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities. 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.
We also have substantial value in our unencumbered real estate assets, which could potentially be used as collateral in future borrowing opportunities. Our ability to meet our long–term contractual obligations and to finance our operating requirements, growth and development plans will depend upon our future performance.
Guarantees At December 31, 2024, 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, 2024, we did not participate in any such financial instruments.
Guarantees At December 31, 2025, 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, 2025, we did not participate in any such financial instruments.
Also included in net patient revenues for the years ended December 31, 2024 and 2023, respectively, is $12,749,000 and $20,214,000 of supplemental Medicaid payments that were received to help mitigate the healthcare workforce crisis and the inflationary labor market. 35 Table of Contents Other revenues in 2024 were $46,178,000, a decrease of $7,752,000, or 14.4%, as further detailed in Note 4 to our consolidated financial statements.
Also included in net patient revenues for the years ended December 31, 2024 and 2023, respectively, is $12,749,000 and $20,214,000 of supplemental Medicaid payments that were received to help mitigate the healthcare workforce crisis and the inflationary labor market. 36 Other revenues in 2024 were $46,178,000, a decrease of $7,752,000, or 14.4%, as further detailed in Note 3 to our consolidated financial statements.
The Company’s CODM evaluates performance and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company, while enhancing long-term shareholder value.
The Company’s CODM evaluates performance including pretax earnings and allocates capital resources to each segment based on an operating model that is designed to improve the quality of patient care and profitability of the Company, while enhancing long-term shareholder value.
At December 31, 2024, we operate or manage 80 skilled nursing facilities with 10,341 1icensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies located in 9 states.
At December 31, 2025, we operate or manage 80 skilled nursing facilities with 10,329 1icensed beds, 26 assisted living facilities with 1,413 units, nine independent living facilities, three behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies located in 9 states.
Our future performance 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. 40 Table of Contents Contingencies See Note 17 to the consolidated financial statements for additional information on pending litigation and other contingencies.
Our future performance 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. 41 Contingencies See Note 16 to the consolidated financial statements for additional information on pending litigation and other contingencies.
We also own the real estate of 10 healthcare properties and lease these properties to third party operators. 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.
We also own the real estate of 10 healthcare properties and lease these properties to third party operators. 30 Executive Summary Earnings To monitor our earnings, we have developed budgets and management reports to monitor labor, census, and the composition of revenues.
Accrued Risk Reserves Our accrued professional liability and workers’ compensation reserves totaled $103,616,000 and $103,259,000 at December 31, 2024 and 2023, 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.
Accrued Risk Reserves Our accrued professional liability and workers’ compensation reserves totaled $121,595,000 and $103,616,000 at December 31, 2025 and 2024, 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.
The overall census (based on operational beds) in owned and leased skilled nursing facilities for 2024 was 88.6% compared to 87.9% in 2023 and 83.8% in 2022. Due to 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 2025 was 89.7% compared to 88.6% in 2024 and 87.9% in 2023. Due to America’s healthcare labor shortage, the challenge of maintaining desirable patient census levels has been amplified.
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. The marketable equity securities portfolio consists mainly of publicly-traded healthcare REIT’s and other blue-chip public companies held within our insurance companies.
We recorded unrealized gains in the amount of $22,344,000 for the increase in fair value of our marketable equity securities portfolio for the year ended December 31, 2025. The marketable equity securities portfolio consists mainly of publicly-traded healthcare REIT’s and other blue-chip public companies held within our insurance companies.
The tables below summarize NHC's overall performance in these Five-Star ratings versus the skilled nursing industry as of December 31, 2024: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 80 Number of 4 and 5-star rated skilled nursing facilities 46 Percentage of 4 and 5-star rated skilled nursing facilities 57% 35% Average rating for all skilled nursing facilities, end of period 3.6 2.8 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, 2025: NHC Ratings Industry Ratings Total number of skilled nursing facilities, end of period 80 Number of 4 and 5-star rated skilled nursing facilities 50 Percentage of 4 and 5-star rated skilled nursing facilities 62.5% 38.6% Average rating for all skilled nursing facilities, end of period 3.83 2.95 Development and Growth We are undertaking to expand our post–acute and senior health care operations while protecting our existing operations and markets.
Percentage of Net Operating Revenues Year Ended December 31, 2024 2023 2022 Revenues: Net patient revenues 95.8 % 95.3 % 94.8 % Other revenues 3.5 4.7 4.2 Government grant income 0.7 – 1.0 Net operating revenues and grant income 100.0 100.0 100.0 Costs and Expenses: Salaries, wages and benefits 62.0 62.4 63.2 Other operating 24.6 25.2 26.6 Facility rent 3.3 3.6 3.8 Depreciation and amortization 3.2 3.7 3.7 Interest 0.3 0.1 0.1 Impairment (recovery) of assets – – (0.3 ) Total costs and expenses 93.4 95.0 97.1 Income from operations 6.6 5.0 2.9 Non–operating income 1.4 1.5 1.0 Unrealized gains (losses) on marketable equity securities 2.4 1.3 (1.4 ) Income before income taxes 10.4 7.8 2.5 Income tax provision (2.6 ) (2.1 ) (0.7 ) Net income 7.8 5.7 1.8 Net income (loss) attributable to noncontrolling interest 0.0 0.2 0.3 Net income attributable to common stockholders of NHC 7.8 % 5.9 % 2.1 % 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, 2025 2024 2023 Revenues: Net patient revenues 96.8 % 95.8 % 95.3 % Other revenues 3.2 3.5 4.7 Government stimulus income – 0.7 – Net operating revenues and stimulus income 100.0 100.0 100.0 Costs and Expenses: Salaries, wages and benefits 60.7 62.0 62.4 Other operating 24.9 24.6 25.2 Facility rent 3.0 3.3 3.6 Depreciation and amortization 3.0 3.2 3.7 Total costs and expenses 91.6 93.1 94.9 Income from operations 8.4 6.9 5.1 Non–operating income 1.2 1.4 1.5 Interest expense (0.4 ) (0.3 ) (0.1 ) Unrealized gains on marketable equity securities 1.5 2.4 1.3 Income before income taxes 10.7 10.4 7.8 Income tax provision (2.7 ) (2.6 ) (2.1 ) Net income 8.0 7.8 5.7 Net (income) loss attributable to noncontrolling interest (0.2 ) 0.0 0.2 Net income attributable to common stockholders of NHC 7.8 % 7.8 % 5.9 % 33 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) .
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 $76,121,000, our unrestricted marketable equity securities of $140,064,000, and our borrowing capacity on the $50 million available line of credit.
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 $92,829,000, our unrestricted marketable equity securities of $162,972,000, and our borrowing capacity on the $50 million available line of credit.
The White Oak portfolio consists of 15 skilled nursing facilities, two assisted living facilities, and four independent living facilities. The White Oak operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina.
(“White Oak”). The White Oak portfolio consisted of 15 skilled nursing facilities, two assisted living facilities, four independent living facilities and a long-term care pharmacy. The White Oak operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina.
Total costs and expenses Total costs and expenses were $1,221,622,000 for 2024, an increase of $137,212,000, or 12.7%, from $1,084,410,000 in 2023. Salaries, wages, and benefits increased $98,586,000, or 13.8%, to $810,930,000 from $712,344,000.
Total costs and expenses Total costs and expenses were $1,217,487,000 for 2024, an increase of $133,401,000, or 12.3%, from $1,084,086,000 in 2023. Salaries, wages, and benefits increased $98,586,000, or 13.8%, to $810,930,000 in 2024 from $712,344,000 in 2023.
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.
Although we continue to face workforce and labor shortages within all of our operations, we are working diligently to find solutions to reduce and eliminate agency nurse staffing expenses within our healthcare operations. The labor and workforce shortages have resulted in us contracting with agency nurse staffing companies.
Our primary uses of cash include salaries, wages and other operating costs of our healthcare operations, the cost of additions to and acquisitions of real property, facility rent expenses, and dividend distributions. These sources and uses of cash are reflected in our consolidated statements of cash flows and are discussed in further detail below.
Our primary uses of cash include salaries, wages and other operating costs of our healthcare operations, the cost of additions to and acquisitions of real property, facility rent expenses, and dividend distributions.
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 Hospice New Agency 1 agency Morristown, TN April 2024 Hospice New Agency 1 agency Lawrenceburg, TN July 2024 Hospice New Agency 1 agency Wytheville, VA August 2024 Hospice New Agency 1 agency Clinton, TN October 2024 30 Table of Contents On August 1, 2024, the Company purchased the White Oak portfolio, including its long-term care pharmacy.
Type of Operation Description Size Location Placed in Service 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 Hospice New Agency 1 agency Morristown, TN April 2024 Hospice New Agency 1 agency Lawrenceburg, TN July 2024 Hospice New Agency 1 agency Wytheville, VA August 2024 Hospice New Agency 1 agency Clinton, TN October 2024 On August 1, 2024, the Company purchased the assets of White Oak Management, Inc.
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.
The increase in non-GAAP earnings for the year ended December 31, 2025 compared to 2024 was primarily due to the continued increase in skilled nursing census, skilled nursing per diem increases from some of our governmental payors, the continued reduction of agency staffing expense, and the White Oak operations being accretive to earnings.
In addition to cash flows from operations, we have current cash on hand of $76,121,000 and unrestricted marketable equity securities of $140,064,000. We also have unencumbered real estate and the borrowing capacity on our $50 million available line of credit.
Short – term liquidity We expect to meet our short–term liquidity requirements primarily from our cash flows from operating activities. In addition to cash flows from operations, we have current cash on hand of $92,829,000 and unrestricted marketable equity securities of $162,972,000. We also have unencumbered real estate and the borrowing capacity on our $50 million available line of credit.
Cash provided by operating activities consisted of net income of $102,086,000 and adjustments for non–cash items of $32,027,000. There was cash used for working capital needs in the amount of $25,717,000 for the year ended December 31, 2024, which was primarily driven by the White Oak acquisition.
Cash provided by operating activities consisted of net income of $122,606,000 and adjustments for non–cash items of $30,244,000. There was cash provided by working capital needs in the amount of $33,395,000 for the year ended December 31, 2025. In 2024, there was cash used for working capital in the amount of $25,717,000.
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 in the prior year.
Excluding the unrealized gains in our marketable equity securities portfolio and other non-GAAP adjustments, adjusted net income was $104,067,000 for the year ended December 31, 2025 compared to $76,862,000 for the same period a year ago.
In 2023, there was cash provided by working capital in the amount of $17,396,000. Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized losses on our marketable equity securities, gain on the sale of an unconsolidated company, deferred taxes, and stock compensation.
Included in the adjustments for non-cash items are depreciation expense, equity in earnings of unconsolidated investments, unrealized gains on our marketable equity securities, gain on the sale of property and equipment, deferred taxes, and stock compensation.
Period to Period Increase (Decrease) 2024 vs. 2023 2023 vs. 2022 Amount Percent Amount Percent Revenues: Net patient revenues $ 164,145 15.1 % $ 58,529 5.7 % Other revenues (7,752 ) (14.4 ) 8,734 19.3 Government grant income 9,445 100.0 (11,457 ) (100.0 ) Net operating revenues and grant income 165,838 14.5 55,806 5.1 Costs and Expenses: Salaries, wages and benefits 98,586 13.8 26,175 3.8 Other operating 33,207 11.5 (1,189 ) (0.4 ) Facility rent 1,657 4.0 548 1.3 Depreciation and amortization (49 ) (0.1 ) 1,545 3.8 Interest 3,811 1,176.2 (239 ) (42.5 ) Impairment (recovery) of assets – – 3,728 100.0 Total costs and expenses 137,212 12.7 30,568 2.9 Income from operations 28,626 50.1 25,238 79.1 Non–operating income 3,030 18.2 5,519 49.5 Unrealized gains (losses) on marketable equity securities 16,014 107.2 30,750 194.5 Income before income taxes 47,670 53.7 61,507 225.9 Income tax provision (10,872 ) (46.4 ) (16,196 ) (223.3 ) Net income 36,798 56.4 45,311 226.8 Net (income) loss attributable to noncontrolling interest (1,669 ) (110.5 ) (958 ) (38.8 ) Net income attributable to common stockholders of NHC $ 35,129 52.6 % $ 44,353 197.6 % 2024 Compared to 2023 Net operating revenues and grant income for the year ended December 31, 2024 totaled $1,307,382,000 compared to $1,141,544,000 for the year ended December 31, 2023, an increase of 14.5%.
Period to Period Increase (Decrease) 2025 vs. 2024 2024 vs. 2023 Amount Percent Amount Percent Revenues: Net patient revenues $ 217,872 17.4 % $ 164,145 15.1 % Other revenues 1,972 4.3 (7,752 ) (14.4 ) Government stimulus income (9,445 ) (100.0 ) 9,445 100.0 Net operating revenues and stimulus income 210,399 16.1 165,838 14.5 Costs and Expenses: Salaries, wages and benefits 110,150 13.6 98,586 13.8 Other operating 55,812 17.4 33,207 11.5 Facility rent 3,045 7.1 1,657 4.0 Depreciation and amortization 2,935 7.0 (49 ) (0.1 ) Total costs and expenses 171,942 14.1 133,401 12.3 Income from operations 38,457 42.8 32,437 56.5 Non–operating income (1,583 ) (8.0 ) 3,030 18.2 Interest expense (2,236 ) (54.1 ) 3,811 1,176.2 Unrealized gains on marketable equity securities (8,614 ) (27.8 ) 16,014 107.2 Income before income taxes 26,024 19.1 47,670 53.7 Income tax provision (5,504 ) (16.0 ) (10,872 ) (46.4 ) Net income 20,520 20.1 36,798 56.4 Net (income) loss attributable to noncontrolling interest (2,432 ) (1,529.6 ) (1,669 ) (110.5 ) Net income attributable to common stockholders of NHC $ 18,088 17.7 % $ 35,129 52.6 % 2025 Compared to 2024 Net operating revenues and stimulus income for the year ended December 31, 2025 totaled $1,517,781,000 compared to $1,307,382,000 for the year ended December 31, 2024, an increase of 16.1%.
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 12/31/24 12/31/23 $ % 12/31/23 12/31/22 $ % Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period $ 125,968 $ 74,865 $ 51,103 68.3 % $ 74,865 $ 119,743 $ (44,878 ) (37.5 )% Cash provided by operating activities 107,303 111,216 (3,913 ) (3.5 ) 111,216 8,742 102,474 1,172.2 Cash used in investing activities (236,693 ) (17,568 ) (219,125 ) (1,247.3 ) (17,568 ) (5,978 ) (11,590 ) (193.9 ) Cash provided by / (used in) financing activities 100,344 (42,545 ) 142,889 335.9 (42,545 ) (47,642 ) 5,097 10.7 Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 96,922 $ 125,968 $ (29,046 ) (23.1 )% $ 125,968 $ 74,865 $ 51,103 68.3 % 39 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2024 was $107,303,000 as compared to $111,216,000 and $8,742,000 for the years ended December 31, 2023 and 2022, respectively.
These sources and uses of cash are reflected in our consolidated statements of cash flows and are discussed in further detail below. 39 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 12/31/25 12/31/24 $ % 12/31/24 12/31/23 $ % Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period $ 96,922 $ 125,968 $ (29,046 ) (23.1 )% $ 125,968 $ 74,865 $ 51,103 68.3 % Cash provided by operating activities 185,078 107,303 77,775 72.5 107,303 111,216 (3,913 ) (3.5 ) Cash used in investing activities (33,858 ) (236,693 ) 202,835 85.7 (236,693 ) (17,568 ) (219,125 ) (1,247.3 ) Cash (used in) / provided by financing activities (135,955 ) 100,344 (236,299 ) (235.5 ) 100,344 (42,545 ) 142,889 335.9 Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 112,187 $ 96,922 $ 15,265 15.7 % $ 96,922 $ 125,968 $ (29,046 ) (23.1 )% 40 Operating Activities Net cash provided by operating activities for the year ended December 31, 2025 was $185,078,000 as compared to $107,303,000 and $111,216,000 for the years ended December 31, 2024 and 2023, respectively.
Income taxes The income tax provision for 2024 is $34,322,000 (an effective income tax rate of 25.2%). 36 Table of Contents 2023 Compared to 2022 Net operating revenues and grant income for the year ended December 31, 2023 totaled $1,141,544,000 compared to $1,085,738,000 for the year ended December 31, 2022, an increase of 5.1%.
Income taxes The income tax provision for 2025 is $39,826,000 (an effective income tax rate of 24.5%). 35 2024 Compared to 2023 Net operating revenues and stimulus income for the year ended December 31, 2024 totaled $1,307,382,000 compared to $1,141,544,000 for the year ended December 31, 2023, an increase of 14.5%.
In December 2023, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new joint venture. 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.
During the second quarter of 2025, 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 new entity was $5,625,000. The related cost basis of the contributed land was $2,019,000, which resulted in a gain of $3,606,000.
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. 37 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.
Also included in net patient revenues for the years ended December 31, 2025 and 2024, respectively, is $7,246,000 and $12,749,000 of supplemental Medicaid payments that were received to help mitigate the healthcare workforce crisis and the inflationary labor market. 34 Other revenues in 2025 were $48,150,000, an increase of $1,972,000, or 4.3%, as further detailed in Note 3 to our consolidated financial statements.
For the year ended December 31, 2022, included are two behavioral health hospitals, one hospice agency, and one homecare agency. 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, 2024 2023 2022 Net income attributable to National HealthCare Corporation $ 101,927 $ 66,798 $ 22,445 Non-GAAP adjustments: Unrealized (gains) losses on marketable equity securities (30,958 ) (14,944 ) 15,806 Stock-based compensation expense 4,160 2,782 2,612 Operating results for newly-opened operations not at full capacity 130 2,359 5,416 Acquisition-related expenses 3,266 – – Employee retention credit (9,445 ) – – Gain on sale of unconsolidated company (1,024 ) – – Gain on sale of property and equipment – (6,230 ) – Impairment (recovery) of assets – – (3,728 ) Income tax expense (benefit) on non-GAAP adjustments 8,806 4,169 (5,228 ) Non-GAAP Net Income $ 76,862 $ 54,934 $ 37,323 GAAP diluted earnings per share $ 6.53 $ 4.34 $ 1.45 Non-GAAP adjustments: Unrealized (gains) losses on marketable equity securities (1.47 ) (0.72 ) 0.76 Stock-based compensation expense 0.20 0.13 0.13 Operating results for newly-opened operations not at full capacity 0.01 0.10 0.26 Acquisition-related expenses 0.16 – – Employee retention credit (0.45 ) – – Gain on sale of unconsolidated company (0.05 ) – – Gain on sale of property and equipment – (0.30 ) – Impairment (recovery) of assets – – (0.18 ) Non-GAAP diluted earnings per share $ 4.93 $ 3.55 $ 2.42 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, 2024, 2023 and 2022.
Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, stock-based compensation expense, gains on sale of property and equipment, operating results for start-up healthcare operations not at full capacity, acquisition related expenses, the recognition of the employee retention credit, and gains on sales of unconsolidated companies is helpful in allowing investors to assess the Company’s operations more accurately. 38 The table below provides reconciliations of GAAP to non-GAAP items ( dollars in thousands, except per share data ): Year Ended December 31, 2025 2024 2023 Net income attributable to National HealthCare Corporation $ 120,015 $ 101,927 $ 66,798 Non-GAAP adjustments: Unrealized gains on marketable equity securities (22,344 ) (30,958 ) (14,944 ) Stock-based compensation expense 4,399 4,160 2,782 Gain on sale of property and equipment (3,606 ) – (6,230 ) Operating results for newly-opened operations not at full capacity – 130 2,359 Acquisition-related expenses – 3,266 – Employee retention credit – (9,445 ) – Gain on sale of unconsolidated company – (1,024 ) – Income tax expense on non-GAAP adjustments 5,603 8,806 4,169 Non-GAAP Net Income $ 104,067 $ 76,862 $ 54,934 GAAP diluted earnings per share $ 7.67 $ 6.53 $ 4.34 Non-GAAP adjustments: Unrealized gains on marketable equity securities (1.43 ) (1.98 ) (0.97 ) Stock-based compensation expense 0.28 0.28 0.18 Gain on sale of property and equipment (0.23 ) – (0.42 ) Operating results for newly-opened operations not at full capacity – 0.01 0.15 Acquisition-related expenses – 0.21 – Employee retention credit – (0.61 ) – Gain on sale of unconsolidated company – (0.07 ) – Income tax expense on non-GAAP adjustments 0.36 0.56 0.27 Non-GAAP diluted earnings per share $ 6.65 $ 4.93 $ 3.55 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.
During the third and fourth quarters of 2024, cash of $13,000,000 was used to pay down the outstanding principal balance of the long-term debt. Dividends paid to common stockholders was $36,964,000, $35,560,000, and $34,604,000 for the years ended December 31, 2024, 2023 and 2022, respectively.
Net cash used in financing activities totaled $42,545,000 for the year ended December 31, 2023. Cash used to pay down the outstanding principal balance of our long-term debt was $97,000,000 and $13,000,000 for the years ended December 31, 2025 and 2024, respectively.
Financing Activities Net cash provided by financing activities totaled $100,344,000 for the year ended December 31, 2024. Net cash used in financing activities totaled $42,545,000 and $47,642,000 for the years ended December 31, 2023 and 2022, respectively. The funding for the White Oak acquisition was provided by the Company’s cash on hand and borrowings of $150,000,000.
We repurchased common shares outstanding in the amount of $14,730,000, $13,502,000, and $2,482,000 for the years ended December 31, 2025, 2024, and 2023, respectively. In 2024, the funding for the White Oak acquisition was provided by the Company’s cash on hand and borrowings under the credit facility of $150,000,000.
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. 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.
Interest expense increased $2,236,000 to $6,371,000 in 2025 from $4,135,000 in 2024 related to the outstanding long-term debt due to the White Oak acquisition in August 2024. Other income Non–operating income decreased by $1,583,000, or 8.0% to $18,107,000 in 2025 compared to the prior year, as further detailed in Note 4 to our consolidated financial statements.
Investing Activities Net cash used in investing activities totaled $236,693,000 for the year ended December 31, 2024, as compared to $17,568,000 and $5,978,000 for the years ended December 31, 2023 and 2022, respectively. On August, 1, 2024, the acquisition of White Oak resulted in cash used of $215,896,000, as described in Note 2 to our consolidated financial statements.
Investing Activities Net cash used in investing activities totaled $33,858,000 for the year ended December 31, 2025, as compared to $236,693,000 and $17,568,000 for the years ended December 31, 2024 and 2023, respectively. Cash used for property and equipment additions was $36,446,000, $27,600,000, and $27,901,000 for the years ended December 31, 2025, 2024 and 2023, respectively.
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 prior year.
Other operating expenses as a percentage of net operating revenues and stimulus income was 24.9% and 24.6% for the years ended December 31, 2025 and 2024, respectively. The White Oak operations attributed to an increase of $32,737,000 in other operating expenses for the year ended December 31, 2025 compared to the prior year.
Proceeds from the issuance of common stock totaled $14,268,000, $313,000, and $2,114,000 for 2024, 2023 and 2022, respectively. We repurchased common shares outstanding in the amount of $13,502,000, $2,482,000, and $9,903,000 for the years ended December 31, 2024, 2023, and 2022, respectively.
Dividends paid to common stockholders was $38,704,000, $36,964,000, and $35,560,000 for the years ended December 31, 2025, 2024 and 2023, respectively. Proceeds from the issuance of common stock totaled $14,214,000, $14,268,000, and $313,000 for 2025, 2024 and 2023, respectively.
For the year ended December 31, 2023 our agency nurse staffing expenses decreased $30,682,000, or approximately 44.5%, compared to the prior year.
For the year ended December 31, 2025 our agency nurse staffing expenses decreased $9,335,000, or approximately 66.6%, compared to the same period a year ago. Other operating expenses increased $55,812,000, or 17.4%, to $377,202,000 for the year ended December 31, 2025 compared to $321,390,000 for the prior year.
Cash used for property and equipment additions was $27,600,000, $27,901,000, and $30,200,000 for the years ended December 31, 2024, 2023 and 2022, respectively. For the year ended December 31, 2024, we contributed capital of $14,298,000 to a joint venture, multi-family development that is under construction in Franklin, Tennessee.
For the year ended December 31, 2025, we contributed capital of $5,629,000 for two joint venture, multi-family developments that are under construction in Nashville, Tennessee compared to $14,298,000 for the same period in the prior year.
Net operating revenues and grant income Net patient revenues totaled $1,087,614,000 in 2023, an increase of $58,529,000, or 5.7%, compared to the prior year. The overall average census in owned and leased skilled nursing facilities for 2023 was 87.9% compared to 83.8% in 2022. The composite skilled nursing facility per diem increased 6.7% in 2023 compared to 2022.
The overall average census in owned and leased skilled nursing facilities for 2025 was 89.7% compared to 88.6% in 2024. The composite skilled nursing facility per diem increased 4.0% in 2025 compared to 2024. Medicare and managed care per diem rates increased 5.1% and 3.9%, respectively, in 2025 compared to 2024.
In January 2024, the Company sold its 50% joint venture ownership interest in a homecare agency resulting in proceeds from the sale of $2,100,000. Proceeds from the sale of marketable securities, net of purchases, resulted in cash proceeds of $16,913,000, $17,895,000, and $16,168,000 in 2024, 2023, and 2022, respectively.
In January 2024, the Company sold its ownership interest in a homecare agency resulting in proceeds from the sale of $2,100,000. Financing Activities Net cash used in financing activities totaled $135,955,000 for the year ended December 31, 2025. Net cash provided by financing activities totaled $100,344,000 for the year ended December 31, 2024.
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.
Salaries, wages, and benefits as a percentage of net operating revenues and stimulus income was 60.7% compared to 62.0% for the years ended December 31, 2025 and 2024, respectively. The White Oak operations attributed to an increase of $87,199,000 in salaries, wages, and benefits for the year ended December 31, 2025 compared to the prior year.
Removed
The following table lists our recent construction and purchase activities. Type of Operation Description Size Location Placed in Service 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.
Added
The following table lists our recent construction and purchase activities.
Removed
Specifically, the Company believes the presentation of non-GAAP financial information that excludes the unrealized gains or losses on our marketable equity securities, stock-based compensation expense, operating results for start-up healthcare operations not at full capacity, acquisition related expenses, the recognition of the employee retention credit, gains on sales of unconsolidated companies, gains on the sale of property and equipment, and impairments or recoveries of long-lived assets is helpful in allowing investors to assess the Company’s operations more accurately.
Added
The net operating revenues increase was due to an 8.4% increase in same-facility net operating revenues, as well as the August 1, 2024 acquisition of White Oak Manor ("White Oak"). For the year ended December 31, 2025, GAAP net income attributable to NHC was $120,015,000 compared to net income of $101,927,000 for the same period in 2024.
Removed
The operating results for newly opened facilities or agencies not at full capacity include newly constructed healthcare facilities or agencies that are still considered in the start-up phase, which include two hospice agencies for the year ended December 31, 2024. For the year ended December 31, 2023, included are two behavioral health hospitals, two homecare agencies, and two hospice agencies.
Added
The White Oak operations have 1,928 licensed skilled nursing beds, 48 assisted living units, and 302 independent living units in the states of South Carolina and North Carolina. Net operating revenues and stimulus income Net patient revenues totaled $1,469,631,000 in 2025, an increase of $217,872,000, or 17.4%, compared to 2024.
Removed
Excluding the government grant 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% in 2023 as compared to the prior year.
Added
Medicaid and private pay per diem rates increased 3.5% and 6.8%, respectively, in 2025 compared to 2024. White Oak, acquired on August 1, 2024 and with a full year of operations in 2025, attributed to $227,545,000 in net patient revenues for the year ended December 31, 2025 compared to $96,052,000 for the year ended December 31, 2024.
Removed
The net operating revenues increase was primarily driven by the continued occupancy increase in our skilled nursing facilities and increases in skilled nursing per diems from some of our governmental payors. 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.
Added
Total costs and expenses Total costs and expenses were $1,389,429,000 for 2025, an increase of $171,942,000, or 14.1%, from $1,217,487,000 in 2024. Salaries, wages, and benefits increased $110,150,000, or 13.6%, to $921,080,000 in 2025 from $810,930,000 in 2024.
Removed
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.
Added
We have also incurred unfavorable claims activity within our professional liability captive insurance company during 2025. The unfavorable claims activity resulted in additional other operating expenses of $17,563,000 for the year ended December 31, 2025 compared to the same period a year ago.
Removed
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 prior year.
Added
This gain was netted with other operating expenses resulting in a decrease of $3,606,000 in other operating expenses as compared to the same period in the prior year. Facility rent expense increased $3,045,000, or 7.1%, to $46,227,000 in 2025. Depreciation and amortization increased 7.0% to $44,920,000 in 2025.
Removed
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 prior year.
Added
On August 1, 2024, the Company purchased the White Oak portfolio, including its long-term care pharmacy. The White Oak portfolio consists of 15 skilled nursing facilities, two assisted living facilities, and four independent living facilities.
Removed
For the years ended December 31, 2023 and 2022, respectively, we recorded $0 and $11,457,000 in government grant 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.
Added
During the year ended December 31, 2024, the Company recognized $9,445,000 related to the Employee Retention Credit (“ERC”) that was established by the CARES Act and intended to help businesses retain their workforce and avoid layoffs during the pandemic.
Removed
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.
Added
The ERC provided a per employee credit to eligible businesses based on a percentage of qualified wages and health insurance benefits paid to employees. During the second quarter of 2024, all conditions related to the assistance were met and the credit was recognized as government grant income.
Removed
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 prior year.
Added
Income taxes The income tax provision for 2024 is $34,322,000 (an effective income tax rate of 25.2%). 37 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.
Removed
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 prior year.
Added
Proceeds from the sale of marketable securities, net of purchases, resulted in cash proceeds of $7,705,000, $16,913,000, and $17,895,000 in 2025, 2024, and 2023, respectively. On August 1, 2024, the acquisition of White Oak Senior Living resulted in cash used of $215,896,000.
Removed
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. Facility rent expense increased $548,000, or 1.3%, to $41,525,000. Depreciation and amortization increased 3.8% to $42,034,000.
Added
The Company considers the patient's ability and intent to pay the amount of consideration upon admission. Credit losses are recorded as bad debt expense, which is included as a component of other operating expenses in the consolidated statements of operations. 42 Accrued Risk Reserves We are self–insured for risks related to workers’ compensation and general and professional liability insurance.
Removed
Income taxes The income tax provision for 2023 is $23,450,000 (an effective income tax rate of 26.4%). 38 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.
Removed
Principal payments made under finance lease obligations was $860,000, $4,985,000, and $4,695,000 for the years ended December 31, 2024, 2023, and 2022, respectively. The finance lease obligations terminated during the first quarter of 2024. Short – term liquidity We expect to meet our short–term liquidity requirements primarily from our cash flows from operating activities.
Removed
The Company considers the patient's ability and intent to pay the amount of consideration upon admission.
Removed
Credit losses are recorded as bad debt expense, which is included as a component of other operating expenses in the 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.
Removed
Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care.
Removed
These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and the Company’s historical settlement activity, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the retroactive adjustment is subsequently resolved.
Removed
In our opinion, adequate provision has been made for any adjustments that may result from these reviews.
Removed
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. 41 Table of Contents Accrued Risk Reserves We are self–insured for risks related to workers’ compensation and general and professional liability insurance.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−1 removed7 unchanged
Biggest changeHypothetically, 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 $16,325,000. At December 31, 2024, our equity securities had net unrealized gains of $114,545,000.
Biggest changeHypothetically, 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 $18,016,000. At December 31, 2025, our equity securities had net unrealized gains of $136,889,000. Of the total unrealized gains in our marketable equity securities, approximately $99,798,000 is related to our investment in NHI. 43
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.
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 61% 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, 2024, we have available for sale marketable debt securities in the amount of $119,804,000.
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, 2025, we have available for sale marketable debt securities in the amount of $123,293,000.
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, 2024, the fair value of our marketable equity securities is approximately $163,254,000.
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, 2025, the fair value of our marketable equity securities is approximately $180,169,000.
Our investment in NHI comprises approximately $113,003,000, or 69.0%, 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.
Our investment in NHI comprises approximately $124,532,000, or 69.1%, 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.
At December 31, 2024, the credit quality ratings for our fixed income portfolio consisted of the following investment and non-investment grades (as a percent of fair value): 6% AAA rated, 42% AA rated, 33% A rated, 18% BBB rated, and 1% BB rated.
At December 31, 2025, the credit quality ratings for our fixed income portfolio consisted of the following investment and non-investment grades (as a percent of fair value): 5% AAA rated, 40% AA rated, 39% A rated, 12% BBB rated, and 4% BB rated.
Removed
Of the total unrealized gains in our marketable equity securities, approximately $88,269,000 is related to our investment in NHI. 42 Table of Contents

Other NHC 10-K year-over-year comparisons