NRC 8-K
Nrc Health (NRC)
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(State or other jurisdiction
of incorporation)
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(Commission
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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
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Trading Symbol(s)
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Name of each exchange on which registered
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$.001 Par Value
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The
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.02
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Results of Operations and Financial Condition.
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On August 2, 2022, National Research Corporation, a Delaware corporation (the "Company"), issued a press release announcing its financial and operating results for the second quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
On August 3, 2022, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the second quarter ended June 30, 2022. 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/350372698.
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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: August 4, 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
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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 second quarter ended June 30, 2022.
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99.2
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National Research Corporation script for the conference call and online Web simulcast held August 3, 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 P: 1 800 388 4264 | F: 402 475 9061 |
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Contact: |
Kevin R. Karas Chief Financial Officer 402-475-2525 |
NATIONAL RESEARCH CORPORATION ANNOUNCES
SECOND QUARTER 2022 RESULTS
LINCOLN, Nebraska (August 2, 2022) — National Research Corporation, dba NRC Health, (NASDAQ:NRC) today announced results for the second quarter 2022.
Q2 2022 financial results compared to Q2 2021:
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Revenue increased 2% to $37.3 million |
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Operating income decreased 6% to $11.5 million |
In commenting on recent events, Michael Hays, Chief Executive Officer, said, “In the second quarter, our team secured the first official contract for the Human Understanding Program with Novant Health, an integrated health system serving four states and comprised of 15 medical centers and 600 clinics. We look forward to additional notable health systems adopting the Program which will take center stage at NRC Health’s 28th annual Symposium August 21–23 in Seattle. Hundreds of organizations will experience the power of delivering personalized health care at scale.”
Regarding the Company’s 2022 second quarter financial performance, Kevin Karas, Chief Financial Officer, said, “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. While growth in our core offerings remains strong, decreases in revenue from discontinued and non-core offerings reduced our consolidated revenue growth rate to 2% for the quarter. Consistent with our long-term focus, we increased resource allocation for innovation initiatives, marketing and associate retention, increasing operating expenses for the quarter. We also continued to follow our capital allocation strategy, funding our quarterly dividend and additional share repurchases in the second quarter.”
NRC Announces Second Quarter 2022 Results
Page 2
August 2, 2022
Revenue for the second quarter ended June 30, 2022, was $37.3 million, compared to $36.4 million for the same quarter in 2021. Net income for the quarter ended June 30, 2022, was $8.3 million, compared to $8.9 million for the quarter ended June 30, 2021.
Diluted earnings per share decreased to $0.33 for the quarter ended June 30, 2022, from diluted earnings per share of $0.35 for the quarter ended June 30, 2021.
A live simulcast of National Research Corporation’s 2022 second quarter conference call will be available online at https://events.q4inc.com/attendee/350372698 on August 3, 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, 2021 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 Second Quarter 2022 Results
Page 3
August 2, 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 |
Six months ended |
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2022 |
2021 |
2022 |
2021 |
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Revenue |
$ | 37,292 | $ | 36,425 | $ | 75,734 | $ | 71,889 | ||||||||
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Operating expenses: |
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Direct |
13,758 | 12,536 | 28,537 | 24,476 | ||||||||||||
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Selling, general and administrative |
10,748 | 10,016 | 21,397 | 19,536 | ||||||||||||
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Depreciation, amortization and impairment |
1,290 | 1,634 | 2,606 | 3,618 | ||||||||||||
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Total operating expenses |
25,796 | 24,186 | 52,540 | 47,630 | ||||||||||||
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Operating income |
11,496 | 12,239 | 23,194 | 24,259 | ||||||||||||
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Other income (expense): |
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Interest income |
14 | 3 | 19 | 6 | ||||||||||||
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Interest expense |
(318 |
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(423 |
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(635 |
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(855 |
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Other, net |
(128 |
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75 | (81 |
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96 | ||||||||||
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Total other income (expense) |
(432 |
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(345 |
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(697 |
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(753 |
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Income before income taxes |
11,064 | 11,894 | 22,497 | 23,506 | ||||||||||||
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Provision for income taxes |
2,742 | 2,950 | 5,636 | 5,330 | ||||||||||||
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Net income |
$ | 8,322 | $ | 8,944 | $ | 16,861 | $ | 18,176 | ||||||||
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Earnings Per Share of Common Stock: |
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Basic Earnings Per Share |
$ | 0.33 | $ | 0.35 | $ | 0.67 | $ | 0.71 | ||||||||
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Diluted Earnings Per Share |
$ | 0.33 | $ | 0.35 | $ | 0.67 | $ | 0.71 | ||||||||
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Weighted average shares and share equivalents outstanding: |
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Basic |
25,083 | 25,426 | 25,166 | 25,420 | ||||||||||||
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Diluted |
25,211 | 25,645 | 25,300 | 25,656 | ||||||||||||
NRC Announces Second Quarter 2022 Results
Page 4
August 2, 2022
NATIONAL RESEARCH CORPORATION AND SUBSIDIARY
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts and par value)
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June 30, 2022 |
December 31, 2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 32,974 | $ | 54,361 | ||||
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Accounts receivable, net |
13,112 | 13,728 | ||||||
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Other current assets |
5,694 | 5,618 | ||||||
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Total current assets |
51,780 | 73,707 | ||||||
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Property and equipment, net |
13,602 | 12,391 | ||||||
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Goodwill |
61,614 | 61,614 | ||||||
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Other, net |
9,237 | 9,828 | ||||||
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Total assets |
$ | 136,233 | $ | 157,540 | ||||
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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 |
$ | 4,390 | $ | 4,278 | ||||
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Accounts payable and accrued expenses |
4,973 | 7,393 | ||||||
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Accrued compensation |
6,914 | 7,139 | ||||||
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Deferred revenue |
15,496 | 17,213 | ||||||
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Dividends payable |
5,944 | 3,044 | ||||||
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Other current liabilities |
1,870 | 1,321 | ||||||
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Total current liabilities |
39,587 | 40,388 | ||||||
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Notes payable, net of current portion and unamortized debt issuance costs |
20,044 | 22,269 | ||||||
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Other non-current liabilities |
7,978 | 9,546 | ||||||
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Total liabilities |
67,609 | 72,203 | ||||||
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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 110,000,000 shares, issued 30,898,600 in 2022 and 2021, outstanding 24,767,118 in 2022 and 25,361,409 in 2021 |
31 | 31 | ||||||
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Additional paid-in capital |
174,561 | 173,942 | ||||||
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Retained earnings (accumulated deficit) |
(31,242 |
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(36,112 |
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Accumulated other comprehensive loss, foreign currency translation adjustment |
(2,423 |
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(2,375 |
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Treasury stock |
(72,303 |
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(50,149 |
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Total shareholders’ equity |
68,624 | 85,337 | ||||||
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Total liabilities and shareholders’ equity |
$ | 136,233 | $ | 157,540 | ||||
© NRC Health
Exhibit 99.2
Mike:
Thank you, ___________, and welcome everyone to National Research Corporation’s 2022 second quarter 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.
The clear headline for the quarter is that Novant Health contracted for our Human Understanding Program, becoming the first health system in the country able to deliver personalized care at scale. Novant Health’s adoption of the Program provides care teams to understand each patient’s fears and expectations and have that information accessible at each interaction so as to treat each patient as a unique person.
Let me turn the call back over to Kevin to review our financial performance and then open the call to your questions.
Kevin
Thank you, Mike.
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.
We ended the quarter with $147.7 million in total recurring contract value or TRCV. Our TRCV metric represents the total revenue projected under all renewable contracts for their respective next annual renewal periods, assuming no upsells, downsells, price increases, or cancellations, measured as of the most recent quarter end. Our second quarter 2022 ending TRCV decreased by 1% over the prior year.
The decline in TRCV growth rate in 2022 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 discontinuing certain legacy or non-core solutions. Our June 30, 2022, core solution TRCV growth rate was a 3% increase compared to June 30, 2021.
Revenue growth for the second quarter 2022 was 2% over the second quarter of 2021. While growth in our core offerings remains strong, our consolidated revenue growth was negatively impacted from decreases in revenue from our non-core offerings, including decreased Canadian revenue due to the upcoming closure of the Canadian office later this year.
Second quarter operating income declined by 6% compared to the same period in 2021, as we allocated more resources towards innovation initiatives, associate empowerment benefits and new marketing programs. Our second quarter 2022 direct operating expenses also increased due to salary, benefit and contracted service costs to support our clients and invest in workforce automation.
The effective tax rate for the second quarter 2022 and 2021 was 25%.
Net income for the second quarter 2022, was $8.3 million, compared to $8.9 million for same period in 2021.
For the first six months of 2022, revenue increased by 5% to $75.7 million compared to $71.9 in 2021. Net income for the first six months of 2022 decreased to $16.9 million as compared to $18.2 million for the first six months of 2021.
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 $6.2 million for innovation and growth purposes in the first six months of 2022. Next in priority is capital allocation for quarterly dividends and share repurchases. For the first six months of 2022, we funded quarterly dividend payments to shareholders totaling $9.1 million and $22.2 million for share repurchases.
That concludes my comments for this morning. I’ll now turn the call back to Mike.
Mike
Thank you, Kevin.
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 providing updates regarding the roll-out of our Human Understanding Program again next quarter.