National HealthCare Corporation

What they do

NHC operates and manages skilled nursing facilities (SNFs), assisted living, independent living, behavioral health hospitals, homecare, and hospice agencies. It also provides management, accounting, and insurance services to third-party operators and owns real estate leased to other healthcare providers. As of June 30, 2026, NHC operated or managed 80 SNFs, 26 assisted living facilities, 9 independent living facilities, 3 behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies.

Revenue drivers

• Skilled Nursing Facilities — SNFs are the largest revenue source, accounting for the majority of net patient revenues. In 2025, 96.8% of net operating revenues came from healthcare services, with SNFs at the core.
• Net Patient Revenues — For Q2 2026, net patient revenues were $378.4 million, up from $363.3 million in Q2 2025, driven largely by the acquisition of five SNFs.
• Other Revenues — Includes management fees (typically 6% of facility net operating revenues for managed facilities), insurance services, and rental income. Other revenues jumped to $29.7 million in Q2 2026 from $11.6 million a year earlier, partly due to the acquisition-related gains.

Recent performance

For Q2 2026, net operating revenues totaled $408.0 million, up 8.8% year-over-year. GAAP net income attributable to NHC was $40.3 million, up from $23.7 million, with diluted EPS of $2.54 vs. $1.52. Adjusted net income (excluding unrealized gains on marketable securities) was $27.6 million, up 7.2% from $25.7 million, and adjusted diluted EPS was $1.74 vs. $1.65. SNF occupancy improved to 90.1% for Q2 2026 from 89.4% a year earlier.

Strategy

NHC is expanding through acquisitions, notably the June 1, 2026 purchase of five skilled nursing facilities (639 licensed beds) in Tennessee and South Carolina, following the August 2024 acquisition of White Oak Management (15 SNFs, 2 assisted living, 4 independent living, and a pharmacy). Management focuses on improving occupancy, quality metrics (e.g., CMS Five-Star ratings), and reducing professional liability exposure through patient care programs. The company also continues partnerships with hospital systems and payors to strengthen post-acute care delivery.

Risks

• Reimbursement risk — A substantial portion of revenue comes from Medicare and Medicaid; rate reductions or changes in payment methodologies could materially reduce revenues and margins.
• Labor shortage — The healthcare labor shortage makes it challenging to maintain desired patient census levels, which could impact occupancy and revenue.
• Patient care liability — Professional liability and workers' compensation reserves totaled $121.6 million at Dec 31, 2025; higher claims or adverse litigation outcomes could increase costs.
• Regulatory and audit exposure — Government payors may retroactively adjust reimbursements or disallow costs, and hospice operations face payment caps that can limit revenue.

Outlook

Management expects continued focus on maintaining occupancy and improving census, which reached 90.0% for the first half of 2026. NHC plans to continue expanding through acquisitions and partnerships, while managing labor costs and regulatory changes. The company also highlights the need to invest in information systems and cybersecurity to protect patient data and mitigate related risks.