National HealthCare Corporation (NHC) Bundle
Understanding National HealthCare Corporation (NHC) Revenue Streams
Understanding National HealthCare Corporation’s Revenue Streams
The primary revenue sources for the entity can be categorized into net patient revenues and other revenues, which include grants and supplemental payments.
Breakdown of Primary Revenue Sources
- Net Patient Revenues: For the nine months ended September 30, 2024, net patient revenues totaled $894,415,000, compared to $804,617,000 for the same period in 2023, representing an increase of 11.1%.
- Other Revenues: Other revenues amounted to $34,172,000 for the nine months ended September 30, 2024, down from $36,013,000 in 2023.
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth for the nine months ended September 30, 2024, exhibited an overall increase of 11.6% in net operating revenues and grant income compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
| Segment | Revenue (2024) | Revenue (2023) | Percentage Change |
|---|---|---|---|
| Inpatient Services | $790,664,000 | $706,795,000 | 11.9% |
| Homecare and Hospice | $103,751,000 | $97,822,000 | 6.0% |
| Other Revenues | $34,172,000 | $36,013,000 | -5.1% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The acquisition of the White Oak portfolio on August 1, 2024, contributed an additional $37,299,000 in net patient revenues for the nine months ended September 30, 2024.
- Exiting operations of two skilled nursing facilities and one memory care facility on March 1, 2024, led to a reduction of $18,799,000 in net patient revenues.
- Supplemental Medicaid payments contributed $11,314,000 for the nine months ended September 30, 2024, compared to $15,362,000 for the same period in 2023.
Summary of Revenue Performance
The financial performance for the entity indicates a robust growth trajectory in net patient revenues, driven primarily by strategic acquisitions and operational adjustments. The overall revenue growth reflects effective management and responsiveness to market conditions.
For the nine months ended September 30, 2024, total net operating revenues and grant income were $938,032,000, compared to $840,630,000 in 2023, marking a substantial increase in financial health and operational efficacy.
A Deep Dive into National HealthCare Corporation (NHC) Profitability
Profitability Metrics
Analyzing the profitability of the company is essential for investors looking to understand its financial health. This section breaks down key profitability metrics, including gross profit, operating profit, and net profit margins, while also examining trends over time and comparing these metrics against industry averages.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Gross Profit Margin: 6.2% (Income from operations as a percentage of net operating revenues)
- Operating Profit Margin: 21,047 / 340,198 = 6.2%
- Net Profit Margin: Net income attributable to NHC was $42,789,000 on net operating revenues of $340,198,000, resulting in a net profit margin of 12.6%
For the nine months ended September 30, 2024, the metrics were:
- Gross Profit Margin: 59,196 / 938,032 = 6.3%
- Operating Profit Margin: 59,196 / 938,032 = 6.3%
- Net Profit Margin: Net income attributable to NHC was $95,846,000 on net operating revenues of $938,032,000, resulting in a net profit margin of 10.2%
Trends in Profitability Over Time
The company's profitability has shown significant improvement over the past year:
| Metric | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Net Income | $10,388,000 | $42,789,000 | 312.0% |
| Net Operating Revenues | $288,485,000 | $340,198,000 | 17.9% |
For the nine-month period, the trend remains positive:
| Metric | 9M 2023 | 9M 2024 | Change (%) |
|---|---|---|---|
| Net Income | $38,392,000 | $95,846,000 | 149.2% |
| Net Operating Revenues | $840,630,000 | $938,032,000 | 11.6% |
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the company’s profitability ratios indicate a competitive position:
| Metric | Company Ratio | Industry Average | Difference |
|---|---|---|---|
| Gross Profit Margin | 6.2% | 5.5% | 0.7% |
| Operating Profit Margin | 6.3% | 5.0% | 1.3% |
| Net Profit Margin | 12.6% | 9.0% | 3.6% |
Analysis of Operational Efficiency
Operational efficiency has improved significantly, with salaries, wages, and benefits as a percentage of net operating revenues dropping:
- Q3 2023: 63.3%
- Q3 2024: 62.7%
This reflects effective cost management strategies, particularly in the reduction of agency staffing expenses, which decreased approximately 60% year-over-year.
Other operating expenses as a percentage of net operating revenues have also improved:
- Q3 2023: 25.1%
- Q3 2024: 24.3%
Debt vs. Equity: How National HealthCare Corporation (NHC) Finances Its Growth
Debt vs. Equity Structure
National HealthCare Corporation's (NHC) financial health is significantly influenced by its debt and equity structure. As of September 30, 2024, NHC reported total long-term debt of $139,500,000, with a credit facility interest rate of 6.8% and a maturity date set for 2029.
The company's short-term debt primarily consists of the current portion of its long-term obligations, which amounts to $7,500,000. This presents a manageable short-term debt level in the context of its overall capital structure.
Debt-to-Equity Ratio
NHC's debt-to-equity ratio is a crucial metric for assessing its financial leverage. As of the end of September 2024, the total equity stood at approximately $887,340,000. This results in a debt-to-equity ratio calculated as follows:
| Total Long-Term Debt | Total Equity | Debt-to-Equity Ratio |
|---|---|---|
| $139,500,000 | $887,340,000 | 0.157 |
Comparatively, the industry average for healthcare companies typically ranges from 0.5 to 1.0, indicating that NHC maintains a conservative approach to leveraging its capital.
Recent Debt Issuances and Refinancing Activity
On August 1, 2024, NHC secured a $200,000,000 senior credit facility, which includes a $150,000,000 term facility and a $50,000,000 revolving line of credit. This facility is aimed at supporting general corporate purposes, including working capital and acquisitions. As of September 30, 2024, there were no amounts drawn against the revolving line of credit.
Balancing Debt Financing and Equity Funding
NHC has strategically balanced its debt financing and equity funding to support growth initiatives while maintaining financial stability. For the nine months ended September 30, 2024, the company reported net income attributable to stockholders of $95,846,000, which facilitates potential reinvestment into operations or dividend distributions. Furthermore, the company declared dividends of $0.61 per share during this period.
This approach allows NHC to leverage debt for growth while ensuring that equity remains a strong component of its capital structure. The company’s ability to generate positive cash flows from operations, which totaled $94,514,000 for the nine months ended September 30, 2024, further underscores its capacity to manage its debt obligations effectively.
Assessing National HealthCare Corporation (NHC) Liquidity
Assessing National HealthCare Corporation's Liquidity
Current and Quick Ratios
The current ratio is a key indicator of liquidity, calculated by dividing current assets by current liabilities. As of September 30, 2024, the current assets were reported at $419,157,000 and current liabilities at $247,946,000, yielding a current ratio of 1.69.
The quick ratio, which excludes inventory from current assets, is also significant. Here, the quick assets amount to $379,157,000, resulting in a quick ratio of approximately 1.53.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, stood at $171,211,000 as of September 30, 2024. This reflects a positive trend compared to the prior year, where working capital was $153,681,000. The increase in working capital indicates improved short-term financial health.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, revealed significant trends:
- Cash provided by operating activities: $94,514,000
- Cash used in investing activities: ($225,048,000)
- Cash provided by financing activities: $119,640,000
This results in a net decrease in cash and cash equivalents of ($10,894,000) for the period.
Potential Liquidity Concerns or Strengths
Despite the net decrease in cash, the company maintains a strong liquidity position with ample cash reserves and marketable securities. As of September 30, 2024, the cash, cash equivalents, and restricted cash totaled $115,074,000, along with marketable securities worth $164,754,000.
| Liquidity Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Current Assets | $419,157,000 | $366,000,000 |
| Current Liabilities | $247,946,000 | $214,476,000 |
| Working Capital | $171,211,000 | $151,524,000 |
| Current Ratio | 1.69 | 1.71 |
| Quick Ratio | 1.53 | 1.55 |
| Cash Provided by Operating Activities | $94,514,000 | $85,483,000 |
| Cash Used in Investing Activities | ($225,048,000) | ($7,382,000) |
| Cash Provided by Financing Activities | $119,640,000 | ($32,711,000) |
Is National HealthCare Corporation (NHC) Overvalued or Undervalued?
Valuation Analysis
To evaluate whether the company is overvalued or undervalued, we will analyze the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical measure of valuation, typically indicating how much investors are willing to pay per dollar of earnings. As of September 30, 2024, the company's diluted earnings per share (EPS) was $2.73.
Assuming the stock price is $74.93, the P/E ratio can be calculated as follows:
P/E Ratio = Stock Price / EPS = 74.93 / 2.73 = 27.4
Price-to-Book (P/B) Ratio
The P/B ratio compares a company's market value to its book value. As of September 30, 2024, the book value per share was calculated using total stockholders' equity of $986,796,000 and total shares outstanding of 15,440,970.
Book Value per Share = Total Equity / Total Shares = 986,796,000 / 15,440,970 = 63.97
Assuming the same stock price of $74.93, the P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = 74.93 / 63.97 = 1.17
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides insight into how a company is valued relative to its earnings before interest, taxes, depreciation, and amortization. The enterprise value (EV) can be calculated as:
- Market Capitalization = Stock Price Total Shares = 74.93 15,440,970 = 1,156,000,000
- Total Debt = $139,500,000
- Cash and Cash Equivalents = $84,807,000
- Enterprise Value = Market Capitalization + Total Debt - Cash = 1,156,000,000 + 139,500,000 - 84,807,000 = 1,210,692,000
For the nine months ended September 30, 2024, EBITDA was approximately $130,351,000.
EV/EBITDA Ratio = Enterprise Value / EBITDA = 1,210,692,000 / 130,351,000 = 9.28
Stock Price Trends
Over the last 12 months, the stock price has exhibited significant volatility. Starting at $60.00, it peaked at $75.00 before settling at $74.93.
Dividend Yield and Payout Ratios
The company declared dividends of $0.61 per share for 2024. With a current stock price of $74.93, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price = 0.61 / 74.93 = 0.0081 or 0.81%
The payout ratio can be calculated as:
Payout Ratio = Dividends / EPS = 0.61 / 2.73 = 0.223 or 22.3%
Analyst Consensus
The consensus among analysts regarding the stock's valuation is a mix of "Hold" and "Buy" ratings. The average target price among analysts is $80.00, suggesting a potential upside from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 27.4 |
| P/B Ratio | 1.17 |
| EV/EBITDA Ratio | 9.28 |
| Stock Price (12 months) | $74.93 |
| Dividend Yield | 0.81% |
| Payout Ratio | 22.3% |
| Analyst Consensus Target Price | $80.00 |
Key Risks Facing National HealthCare Corporation (NHC)
Key Risks Facing National HealthCare Corporation
National HealthCare Corporation (NHC) is currently facing a variety of internal and external risks that may impact its financial health in 2024. These risks stem from industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The healthcare industry is highly competitive, with numerous players vying for market share in skilled nursing, assisted living, and home care services. As of September 30, 2024, NHC reported an average census of 88.6% across its skilled nursing facilities, which is slightly up from 87.8% the previous year. Despite this increase, the competition remains fierce, particularly with the entry of new operators and the expansion of existing ones.
Regulatory Changes
Regulatory changes pose a significant risk to NHC. The company operates in a heavily regulated environment, which can change rapidly. For example, changes in Medicaid reimbursement rates can have a direct impact on revenue. For the nine months ended September 30, 2024, NHC reported that Medicaid per diem rates increased by 10.2%, while managed care rates decreased by 0.1%. These fluctuations can complicate financial forecasting and budgeting.
Market Conditions
Economic conditions can also affect NHC's operations. In particular, the ongoing inflationary pressures have resulted in increased operational costs. For the three months ended September 30, 2024, total costs and expenses rose by $43,691,000, or 15.9%, compared to the same period in 2023. This increase can strain profit margins, especially if revenue growth does not keep pace.
Operational Risks
NHC's operational risks include staffing challenges, particularly with nursing staff. Agency staffing expenses decreased by approximately 60% for the three months ended September 30, 2024, compared to the same period in 2023, indicating ongoing efforts to stabilize workforce costs. However, reliance on temporary staffing can lead to inconsistencies in care quality, which may impact the company's reputation and operational efficiency.
Financial Risks
Financial risks are also present, particularly concerning cash flow management. For the nine months ended September 30, 2024, NHC's net income attributable to the company increased to $95,846,000 from $38,392,000 in 2023, highlighting growth. However, the company experienced net cash used in investing activities totaling $225,048,000 for the same period, primarily due to the acquisition of the White Oak Senior Living portfolio.
Strategic Risks
Strategically, NHC's decision to acquire the White Oak portfolio on August 1, 2024, which includes 15 skilled nursing facilities, two assisted living facilities, and four independent living facilities, could present integration challenges and potential overextension of resources. The acquisition contributed an additional $37,299,000 in net patient revenues for the nine months ended September 30, 2024, but successful integration is crucial for realizing long-term value.
Mitigation Strategies
NHC has implemented several strategies to mitigate these risks. The company is focusing on reducing agency staffing through direct hiring and improving employee retention strategies. Additionally, NHC is actively monitoring regulatory changes and adjusting its operational strategies accordingly to maintain compliance and optimize reimbursements. The company also maintains a strong liquidity position, with cash on hand of $84,807,000 and marketable equity securities valued at $164,754,000, which provides a buffer against financial volatility.
| Risk Factor | Current Status | Financial Impact |
|---|---|---|
| Industry Competition | Average census at skilled nursing facilities: 88.6% | Potential pressure on pricing and occupancy rates |
| Regulatory Changes | Medicaid per diem increased by 10.2% | Impact on revenue projections |
| Market Conditions | Total costs increased by $43,691,000 (15.9%) | Strain on profit margins |
| Operational Risks | Agency staffing expense decreased by 60% | Improvement in cost efficiency |
| Financial Risks | Net income increased to $95,846,000 | Cash flow management challenges |
| Strategic Risks | Acquired White Oak portfolio | Integration challenges |
Future Growth Prospects for National HealthCare Corporation (NHC)
Future Growth Prospects for National HealthCare Corporation
Analysis of Key Growth Drivers
The acquisition of the White Oak portfolio on August 1, 2024, is a significant growth driver. This portfolio includes:
- 15 skilled nursing facilities
- 2 assisted living facilities
- 4 independent living facilities
- Total licensed skilled nursing beds: 1,928
- Assisted living units: 48
- Independent living units: 302
This acquisition contributed an increase of $37,299,000 in net patient revenues for the nine months ended September 30, 2024.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, net operating revenues and grant income increased by 11.6%, reaching $938,032,000, compared to $840,630,000 for the same period in 2023. The GAAP net income attributable to the company was $95,846,000 for the nine months ended September 30, 2024, a significant rise from $38,392,000 in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic initiatives include:
- Continued expansion through acquisitions, evidenced by the recent purchase of the White Oak portfolio.
- Focus on reducing operational costs, specifically the agency staffing expense, which decreased approximately 60% compared to the same quarter in the previous year.
Competitive Advantages That Position the Company for Growth
Key competitive advantages include:
- High occupancy rates, with a total census at owned and leased skilled nursing facilities averaging 88.6% for the nine months ended September 30, 2024, compared to 87.8% the previous year.
- Incremental increases in per diem rates for skilled nursing facilities, with a composite increase of 7.7% year-over-year.
- Strong performance in Medicaid and private pay per diem rates, which increased by 10.2% and 12.9%, respectively.
Financial Overview and Growth Table
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Operating Revenues | $358,334,000 | $337,817,000 | +6.1% |
| Net Income | $42,789,000 | $10,388,000 | +312.3% |
| Adjusted Net Income | $19,910,000 | $13,250,000 | +50.1% |
| Average Skilled Nursing Facility Occupancy | 88.3% | 88.1% | +0.2% |
| Medicaid Per Diem Rate Increase | 10.2% | 9.8% | +0.4% |
| Private Pay Per Diem Rate Increase | 12.9% | 11.5% | +1.4% |
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Resources:
- National HealthCare Corporation (NHC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of National HealthCare Corporation (NHC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View National HealthCare Corporation (NHC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.