NRC 8-K
Nrc Health (NRC)
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company
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Item 2.02
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Results of Operations and Financial Condition.
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On February 8, 2022, National Research Corporation, a Delaware corporation (the "Company"), issued a press release announcing its financial and operating results for the fourth quarter and year ended December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
On February 9, 2022, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the fourth quarter and year ended December 31, 2021. A copy of the script for such conference call and simulcast is furnished as Exhibit 99.2 to this report. An archive of such conference call and simulcast and the related question and answer session will be available online at https://events.q4inc.com/attendee/203117621.
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Item 9.01
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Financial Statements and Exhibits.
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(d)
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Exhibits.
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EXHIBIT
NUMBER
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EXHIBIT DESCRIPTION
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99.1
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99.2
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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The information contained in Items 2.02 and 9.01 of this report and the exhibits hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
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The information in Items 2.02 and 9.01 of this report and the exhibits hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by forward-looking statements. Please refer to the paragraph at the end of the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.
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NATIONAL RESEARCH CORPORATION
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(Registrant)
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Date: February 10, 2022
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By:
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/s/ Kevin R. Karas
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Kevin R. Karas
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Senior Vice President Finance, Chief Financial
Officer, Treasurer and Secretary
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EXHIBIT
NUMBER
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EXHIBIT DESCRIPTION
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99.1
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National Research Corporation press release announcing its financial and operating results for the fourth quarter and year ended December 31, 2021.
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99.2
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National Research Corporation script for the conference call and online Web simulcast held February 9, 2022.
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document).
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Exhibit 99.1
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1245 “Q” Street Lincoln, NE 68508 Phone: 402-475-2525 Fax: 402-475-9061 |
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Contact: |
Kevin R. Karas |
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Chief Financial Officer |
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402-475-2525 |
NATIONAL RESEARCH CORPORATION ANNOUNCES
FOURTH QUARTER AND CALENDAR YEAR 2021 RESULTS
LINCOLN, Nebraska (February 8, 2022) — National Research Corporation (NASDAQ:NRC) today announced results for the fourth quarter of 2021.
Q4 2021 financial results compared to Q4 2020:
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Revenue increased 10% to $38.3 million |
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Operating Income increased 26% to $12.9 million |
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Operating Income margin increased to 34% of revenue, up from 29% |
Calendar year 2021 results compared to 2020:
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Revenue increased 11% to $148.0 million |
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Operating Income increased 18% to $50.3 million |
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Operating Income margin increased to 34% of revenue, up from 32% |
In commenting on events at year-end, Michael Hays, Chief Executive Officer, said “I’m pleased to announce the launch of NRC’s Health’s Human Understanding Program as a major extension to our offerings. Our Human Understanding Program enables health systems to deliver personalized care at scale, resulting in each patient being treated as a unique person, a long sought-after outcome. As part of the Program’s launch, we benchmarked the extent to which care is being personalized at every major healthcare organization in the 200 largest U.S. markets. This study documented patients being treated as unique reported an amazingly high Net Promotor Score of 82, while patients not treated as such resulted in an extremely low Net Promotor Score of negative 50.”
In closing, Mr. Hays offered an invitation to join the upcoming earnings call to learn more about the Human Understanding Program’s launch.
Regarding the Company’s fourth quarter financial performance, Kevin Karas, Chief Financial Officer, said, “We are pleased with our solid fourth-quarter results and the continuation of our strong performance for this year. Our growth strategy continues to focus on organic growth levers of increasing revenue from our core offerings, including our new Human Understanding Program, within our existing client base, as well as adding new clients to increase market share. As a result, we continued to achieve double-digit revenue and operating income growth rates, as well as continued margin expansion. We also utilized our strong cash flow from operations to continue our quarterly dividend and fund share repurchases in the fourth quarter.”
NRC Announces Fourth Quarter 2021 Results
Page 2
February 8, 2022
Revenue for the quarter ended December 31, 2021, was $38.3 million, compared to $34.8 million for the same quarter in 2020. Net income for the quarter ended December 31, 2021, was $9.6 million, compared to $8.2 million for the quarter ended December 31, 2020.
Diluted earnings per share increased to $0.38 for the quarter ended December 31, 2021, from diluted earnings per share of $0.32 for the quarter ended December 31, 2020.
For calendar year 2021, revenue increased by 11% to $148.0 million, compared to $133.3 million in 2020. Operating income in 2021 increased by 18%, from $42.7 million in 2020 to $50.3 million in 2021. Diluted earnings per share increased to $1.46 for the year ended December 31, 2021, from diluted earnings per share of $1.45 for the year ended December 31, 2020.
Cash Flow from Operations was $46.3 million up from $40.6 million, leaving us with a Net Cash position (Cash minus Notes Payable) of $27.8 million, up from $4.1 million at year end 2020.
A live simulcast of National Research Corporation’s 2021 fourth quarter and year-end conference call will be available online at https://events.q4inc.com/attendee/203117621 on February 9, 2022, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately one hour later and continue for 30 days.
For more than 40 years, National Research Corporation has been a leading provider of analytics and insights that facilitate measurement and improvement to increase patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations in the United States and Canada. Our purpose is to enable human understanding by helping our clients to understand what matters most to each person that they serve.
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “believes,” “expect,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements, including those risks and uncertainties as set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2020 and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.
NRC Announces Fourth Quarter 2021 Results
Page 3
February 8, 2022
NATIONAL RESEARCH CORPORATION AND SUBSIDIARY
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
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Three months ended |
Twelve months ended December 31, |
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2021 |
2020 |
2021 |
2020 |
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Revenue |
$ | 38,298 | $ | 34,774 | $ | 147,954 | $ | 133,277 | ||||||||
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Insurance Recoveries |
- | - | - | 533 | ||||||||||||
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Operating expenses: |
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Direct expenses |
14,167 | 12,818 | 52,350 | 49,187 | ||||||||||||
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Selling, general and administrative |
9,901 | 8,887 | 38,960 | 34,441 | ||||||||||||
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Depreciation and amortization |
1,357 | 2,882 | 6,374 | 7,505 | ||||||||||||
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Total operating expenses |
25,425 | 24,587 | 97,684 | 91,133 | ||||||||||||
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Operating income |
12,873 | 10,187 | 50,270 | 42,677 | ||||||||||||
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Other income (expense): |
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Interest income |
4 | 3 | 14 | 18 | ||||||||||||
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Interest expense |
(399 | ) | (447 | ) | (1,667 | ) | (1,813 | ) | ||||||||
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Other, net |
13 | 131 | 4 | 585 | ||||||||||||
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Total other expense |
(382 | ) | (313 | ) | (1,649 | ) | (1,210 | ) | ||||||||
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Income before income taxes |
12,491 | 9,874 | 48,621 | 41,467 | ||||||||||||
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Provision for income taxes |
2,858 | 1,662 | 11,155 | 4,207 | ||||||||||||
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Net income |
$ | 9,633 | $ | 8,212 | $ | 37,466 | $ | 37,260 | ||||||||
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Earnings Per Share of Common Stock: |
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Basic Earnings Per Share |
$ | 0.38 | $ | 0.32 | $ | 1.47 | $ | 1.48 | ||||||||
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Diluted Earnings Per Share |
$ | 0.38 | $ | 0.32 | $ | 1.46 | $ | 1.45 | ||||||||
| Weighted average shares and share equivalents outstanding | ||||||||||||||||
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Basic |
25,419 | 25,337 | 25,422 | 25,170 | ||||||||||||
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Diluted |
25,597 | 25,684 | 25,640 | 25,696 | ||||||||||||
NRC Announces Fourth Quarter 2021 Results
Page 4
February 8, 2022
NATIONAL RESEARCH CORPORATION AND SUBSIDIARY
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts and par value)
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December 31, 2021 |
December 31, 2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 54,361 | $ | 34,690 | ||||
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Accounts receivable, net |
13,728 | 13,923 | ||||||
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Income taxes receivable |
752 | 1,235 | ||||||
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Other current assets |
4,866 | 4,264 | ||||||
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Total current assets |
73,707 | 54,112 | ||||||
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Property and equipment, net |
12,391 | 11,726 | ||||||
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Goodwill |
61,614 | 57,255 | ||||||
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Other, net |
9,828 | 10,330 | ||||||
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Total assets |
$ | 157,540 | $ | 133,423 | ||||
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Liabilities and Shareholders’ Equity |
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Current liabilities: |
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Current portion of notes payable, net unamortized debt issuance costs |
$ | 4,278 | $ | 4,061 | ||||
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Accounts payable and accrued expenses |
7,393 | 4,279 | ||||||
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Accrued compensation |
7,139 | 6,460 | ||||||
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Deferred revenue |
17,213 | 15,585 | ||||||
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Other current liabilities |
1,321 | 1,296 | ||||||
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Dividends payable |
3,044 | -- | ||||||
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Total current liabilities |
40,388 | 31,681 | ||||||
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Notes payable, net of current portion and unamortized debt issuance costs |
22,269 | 26,547 | ||||||
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Other non-current liabilities |
9,546 | 10,880 | ||||||
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Total liabilities |
72,203 | 69,108 | ||||||
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Shareholders’ equity: |
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Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued |
-- | -- | ||||||
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Common stock, $0.001 par value; authorized 110,000,0000 shares in 2021 and 60,000,000 shares in 2020, issued 30,898,600 in 2021 and 30,775,154 in 2020, outstanding 25,361,409 in 2021 and 25,390,968 in 2020 |
31 | 31 | ||||||
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Additional paid-in capital |
173,942 | 171,785 | ||||||
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Retained earnings (accumulated deficit) |
(36,112 |
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(61,375 |
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Accumulated other comprehensive loss, foreign currency translation adjustment |
(2,375 |
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(2,399 |
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Treasury stock |
(50,149 |
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(43,727 |
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Total shareholders’ equity |
85,337 | 64,315 | ||||||
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Total liabilities and shareholders’ equity |
$ | 157,540 | $ | 133,423 | ||||
-END-
Exhibit 99.2
Mike:
Thank you, ___________, and welcome everyone to National Research Corporation’s 2021 fourth quarter and year-end earnings call. My name is Mike Hays, the Company’s CEO, and joining me on the call today is Kevin Karas, our Chief Financial Officer.
Before we continue, I would ask Kevin to review conditions related to any forward-looking statements that may be made as part of today’s call.
Kevin.
Kevin:
Thank you, Mike.
This conference call includes forward-looking statements related to the Company that involve risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the facts that could affect the Company's future results, please see the Company's filings with the Securities and Exchange Commission. With that, I’ll turn it back to you, Mike.
Mike:
Thanks, Kevin, and again, welcome everyone.
My remarks today center on sharing the evolution of NRC Health’s strategic direction with a focus on our future trajectory. The foundation of our growth strategy builds upon our past work digitizing the collection of patient feedback which, as you are aware, shortens cycle times in delivering insights to our clients and represents the views of a far greater numbers of patients. These innovations from legacy approaches to capture customer feedback have driven increased retention and spend from current clients and new logo wins against Press Ganey.
To this foundation of digitally measuring the experience of a person’s past healthcare encounters, NRC Health has added the capability and capacity to have a dialogue with patients before their healthcare visit to understand their preferences, fears, and expectations for their upcoming appointment. Armed with this understanding, care teams can personalize care delivery resulting in each patient being treated as a unique person. Uniqueness is an important outcome of care delivery, given consumers cite healthcare as the most consequential, personal, and expensive of all services and given such, [87%] of consumers in the United States expect personalized care.
We have branded our ability to enable the delivery of personalized care for all patients as our Human Understanding Program. The business case is basic: delivering personalized care improves clinical outcomes, reduces costs, and creates lasting patient/provider relationships. All healthcare organizations are aware of the business need and strive to better understand those they serve so as to treat each patient uniquely. To this end, some healthcare systems are doing better than others. In fact, we have benchmarked every major healthcare organization in the 200 largest U.S. markets and performance ranges from zero percent of patients feeling they were treated as unique to a few select organizations where 100% of patients reporting everyone in the organization did so. Net Promotor Scores were 82, an amazingly high NPS, and patients were 12 times more likely to be promoters of these top performing health systems. At the lower end of the range, we documented an extremely low NPS of negative 50. In these lower performing health systems, patients were 13 times more likely to be a detractor of the brand.
These benchmarks reconfirmed the need for improvement and magnify the value of NRC Health’s offerings, which is to enable partner organizations to treat every patient as unique.
The Human Understanding Program enables personalization by pushing relevant and contextual patient information to our partner organizations’ workflow tools, to ensure the right care team member has the right information, at the right time, to make each interaction with the patient smarter and personalized. Furthermore, these fears, preferences, and expectations are routinely updated and appended to the person’s lifetime record creating an even more robust, ever-evolving motion picture of each person.
The impact is notable in client organizations that have deployed our Human Understanding Program. These client organizations have enabled personalized care delivery at scale; improved care coordination and patient engagement has become more effective. In essence, the person has been treated in all interactions as unique.
With that, I will now turn the call back over to Kevin.
Kevin
Thank you, Mike.
I am pleased to report solid fourth quarter results and the continuation of our strong performance for the year as we continued to achieve double-digit revenue and operating income growth. Our 2021 annual revenue growth of 11% represented our highest annual growth rate since 2012. We also increased 2021 full-year operating income by 18% over 2020 and increased operating margin to 34%, up from 32% in 2020.
We ended 2021 with $150.9 million in total recurring contract value or TRCV. TRCV represents 12 months of revenue from our current client contracts, which are essentially all fixed-price subscription agreements. Our 2021 ending TRCV increased by 4% over the prior year, compared to an annual increase of 6% for 2020.
The decline in TRCV growth rate in 2021 was impacted by our strategy to continue to evolve our business mix as we focus on growing our digital core solutions, while at the same time eliminating certain legacy or non-core solutions. Decisions to eliminate certain legacy offerings over the next year for our Canadian and insurance payer markets resulted in a decrease to the 2021 ending TRCV of $4.2 million. Our adjusted 2021 TRCV growth rate without those eliminations was 7%.
The combination of higher growth rates from our digital core offerings and elimination of non-core offerings increased TRCV for our digital core solutions to 85% of TRCV at the end of 2021, up from 57% at the end of 2018.
Again, our growth strategy continues to focus on organic growth levers of increasing revenue from our core offerings within our existing client base, as well as adding new clients to increase market share.
With respect to our existing client base, we saw a continued increase in our client retention rate, as well as an increase in clients utilizing multiple solutions, to 32%, up from 28% at the end of 2020. While this increase was very positive, we still have a significant addressable market opportunity within our client base for increased penetration.
Our new sales declined from $29.5 million in 2020 to $22.0 million in 2021, which we believe was primarily attributed to fewer new sales opportunities related to the continued impact of COVID for our clients.
Operating income grew over the prior year by 26% and 18% respectively, for the fourth quarter and full year of 2021. As we generate revenue growth, the efficiencies inherent in our subscription model continue to drive operating leverage and margin improvements, a hallmark of our financial performance. We also benefited from focus and discipline in managing our cost structure in 2021.
Net income for the fourth quarter and full year 2021 increased by 17% and 1% respectively, over the same periods in 2020. The lower net income increase relative to the increase in operating income was due to changes in our effective tax rate.
The effective tax rate for both the fourth quarter and year ended December 31, 2021, increased to 23%, compared to 17% and 10%, respectively, for the same periods in 2020, mainly due to decreased tax benefits from the exercise and vesting of share-based compensation awards and higher state income taxes in 2021.
Annual cash flow from operations was $46.3 million in 2021, compared to $40.6 million in 2020, an increase of 14%. The Company ended 2021 with a cash balance of $54.4 million, up from $34.7 million at the end of 2020.
The Company’s Board of Directors has established priorities for capital allocation with funding of innovation and growth investments, including both M&A activity, as well as internal projects, as the preferred use of capital. The Company funded $7.6 for innovation and growth purposes in 2021. Next in priority is capital allocation for quarterly dividends and share repurchases. In 2021, we paid $9.2 million in quarterly dividends to shareholders and $4.6 million for share repurchases.
That concludes my comments for this morning. I’ll now turn the call back to Mike.
Mike
Thank you, Kevin.
We will report on our partners’ adoption of our Human Understanding Program as a key growth lever on future earning calls and, as well, look for additional Human Understanding Program announcements.
This completes our prepared remarks, so operator I will now ask you to open the call to questions.
Closing Statement – Mike
Thank you for your time today. We look forward to reporting our progress next quarter.