8-K - NRC - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

November 7, 2023

_______________________________________________________________________________

National Research Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-35929	47-0634000
(State or other jurisdiction<br><br> <br>of incorporation)	(Commission<br><br> <br>File Number)	(IRS Employer<br><br> <br>Identification No.)
1245 Q Street, Lincoln, Nebraska	68508
---	---
(Address of principal executive offices)	(Zip Code)

(402) 475-2525

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
$.001 Par Value Common Stock	NRC	The NASDAQ Stock Market
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).
---
	Emerging growth company ☐
---	---
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. ☐

Item 2.02	Results of Operations and Financial Condition.
	On November 7, 2023, National Research Corporation, a Delaware corporation (the "Company"), issued a press release announcing its financial and operating results for the third quarter ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.<br><br> <br><br><br> <br>On November 8, 2023, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the third quarter ended September 30, 2023. 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/533804877.
Item 9.01	Financial Statements and Exhibits.
	(d)	Exhibits.
	EXHIBIT<br><br> <br>NUMBER	EXHIBIT DESCRIPTION
	99.1	National Research Corporation press release announcing its financial and operating results for the third quarter ended September 30, 2023.
	99.2	National Research Corporation script for the conference call and online Web simulcast held November 8, 2023.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document).
	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.
	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.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NATIONAL RESEARCH CORPORATION
	(Registrant)
Date: November 8, 2023	By:	/s/ Kevin R. Karas
		Kevin R. Karas
		Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary

EXHIBIT INDEX

EXHIBIT<br><br> <br>NUMBER	EXHIBIT DESCRIPTION
99.1	National Research Corporation press release announcing its financial and operating results for the third quarter ended September 30, 2023.
99.2	National Research Corporation script for the conference call and online Web simulcast held November 8, 2023.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

ex_593604.htm

Exhibit 99.1

1245 Q Street, Lincoln, NE 68508<br><br> <br>P: 1 800 388 4264	F: 402 475 9061<br><br> <br>nrchealth.com
Contact:	Kevin R. Karas
---	---
	Chief Financial Officer
	402-475-2525

NATIONAL RESEARCH CORPORATION ANNOUNCES

THIRD QUARTER 2023 RESULTS

LINCOLN, Nebraska (November 7, 2023) — National Research Corporation, dba NRC Health, (NASDAQ:NRC) today announced results for the third quarter 2023.

Regarding the Company’s 2023 third quarter, Kevin Karas, Chief Financial Officer, said, “New sales increased compared to the third quarter of 2022, supported by growth in our Human Understanding Program, with adoption by 91 healthcare organizations as of September 30, 2023. While building our sales pipeline, we are also highly focused on controlling costs in an inflationary environment. We have realized sequential quarterly operating margin improvement in the last two quarters and will continue to emphasize returning to our historical operating margins.”

Mr. Karas continued: “From a capital standpoint, NRC remains well-positioned to execute the entire range of capital allocation alternatives, including funding innovation and growth investments, shareholder dividends and share repurchases. At September 30, 2023, the Company had approximately $20 million of net debt and $25 million available on its revolving line of credit after funding $3.7 million for innovation and growth, $27.5 million for dividend payments, and $310,000 for share repurchases during the quarter.”

Diluted earnings per share decreased to $0.32 for the quarter ended September 30, 2023, from diluted earnings per share of $0.33 for the quarter ended September 30, 2022.

NRC Announces Third Quarter 2023 Results

Page 2

November 7, 2023

A live simulcast of National Research Corporation’s 2023 third quarter conference call will be available online at https://events.q4inc.com/attendee/533804877 November 8, 2023, 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, NRC Health (NASDAQ: NRC) has led the charge to humanize healthcare and support organizations in their understanding of each unique individual. NRC Health’s commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market research, and emphasis on consumer preferences are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems. For more information, email info@nrchealth.com, or visit www.nrchealth.com.

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,” “focus,” “will,” 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, 2022 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 Third Quarter 2023 Results

Page 3

November 7, 2023

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended<br> September 30						Nine months ended<br> September 30
	2023			2022			2023			2022
Revenue	$	37,945		$	37,691		$	110,579		$	113,424
Operating expenses:
Direct		14,633			14,524			42,222			43,062
Selling, general and administrative		11,802			10,762			35,552			32,159
Depreciation and amortization		1,555			1,296			4,469			3,902
Total operating expenses		27,990			26,582			82,243			79,123
Operating income		9,955			11,109			28,336			34,301
Other income (expense):
Interest income		256			15			779			34
Interest expense		(160	)		(288	)		(594	)		(923	)
Other, net		(12	)		11			(27	)		(69	)
Total other income (expense)		84			(262	)		158			(958	)
Income before income taxes		10,039			10,847			28,494			33,343
Provision for income taxes		2,163			2,549			6,381			8,184
Net income	$	7,876		$	8,298		$	22,113		$	25,159
Earnings Per Share of Common Stock:
Basic Earnings Per Share	$	0.32		$	0.34		$	0.90		$	1.01
Diluted Earnings Per Share	$	0.32		$	0.33		$	0.89		$	1.00
Weighted average shares and share equivalents outstanding:
Basic		24,560			24,716			24,574			25,014
Diluted		24,695			24,847			24,715			25,147

NRC Announces Third Quarter 2023 Results

Page 4

November 7, 2023

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts and par value)

			December 31,<br><br> <br>2022
Assets	****	****	****	****	****
Current assets:
Cash and cash equivalents	3,828		$	25,026
Accounts receivable, net	14,467			14,461
Other current assets	6,448			4,229
Total current assets	24,743			43,716
Property and equipment, net	25,589			17,248
Goodwill	61,614			61,614
Other, net	8,190			7,883
Total assets	120,136		$	130,461
Liabilities and Shareholders’ Equity	****	****	****	****	****
Current liabilities:
Current portion of notes payable	4,665		$	4,491
Line of credit	5,000			--
Accounts payable and accrued expenses	6,027			5,136
Accrued compensation	5,029			4,551
Deferred revenue	16,238			15,198
Dividends payable	2,947			2,956
Other current liabilities	899			1,085
Total current liabilities	40,805			33,417
Notes payable, net of current portion and unamortized debt issuance costs	14,164			17,690
Other non-current liabilities	7,295			7,321
Total liabilities	62,264			58,428
Shareholders’ equity:
Preferred stock, 0.01 par value, authorized 2,000,000 shares, none issued	--			--
Common stock, 0.001 par value; authorized 110,000,000 shares, issued 30,956,479 in 2023 and 30,922,181 in 2022, outstanding 24,562,068 in 2023 and 24,628,173 in 2022	31			31
Additional paid-in capital	176,714			175,453
Retained earnings (accumulated deficit)	(36,482	)		(25,184	)
Treasury stock	(82,391	)		(78,267	)
Total shareholders’ equity	57,872			72,033
Total liabilities and shareholders’ equity	120,136		$	130,461

All values are in US Dollars.

ex_593605.htm

Exhibit 99.2

Kevin:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2023 third quarter earnings call. My name is Kevin Karas, the company’s CFO, and joining me on the call today is Linda Stacy, our Vice President of Finance.

Before we continue, I would ask Linda to review conditions related to any forward-looking statements that may be made as part of today’s call. Linda.

Linda:

Thank you, Kevin.

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, Kevin.

Kevin:

Thanks, Linda, and again, welcome everyone.

This quarter was a good start on our plan to accelerate revenue growth and expand margins over the coming quarters. We have seen sales and margin improving sequentially the past two quarters with only partial implementation of the plan. I will cover three topics to set the stage for where we are headed before Linda covers the financial metrics.

First, new sales. NRC Health is a leader in helping healthcare providers improve their patient experience on an individualized basis, using decades of benchmarking and our unique ability to translate data into actionable advice. Our Human Understanding Program, released in the second quarter of 2022, has become widely accepted in the market, with 91 healthcare provider systems adopting HU, 18% of which were from new logos. Contract value growth for Human Understanding Program adoption by existing clients is averaging 13%, which is in line with results from the successful rollout of our Real-time solution several years ago. These results were without the benefit of a fully developed sales force.

To capitalize on growing demand, we have increased the size of our sales force by 19% since the beginning of the year and expect to continue to add experienced personnel in this area. The expansion of sales and marketing resources has been successful in building our sales pipeline and producing two consecutive quarters of double-digit sales growth compared to the prior year. We expect to see the results of these efforts in revenue and TRCV in future periods.

Second, margin expansion. While increasing our sales force, we reduced the number of non-sales personnel. On a net basis, we have decreased the full-time equivalent number of associates by 11% at the end of the third quarter 2023 compared to the end of third quarter 2022. Most of the decrease occurred during the third quarter of 2023, and the related cost reduction has not yet been fully reflected. We expect to see the results of these efforts in revenue per associate and operating margin in future periods.

Third, we are highly cognizant of our clients’ desire for solutions across multiple patient, customer, and employee experiences. With our continued product development and partner alliances, we are expanding our product offerings to take advantage of a much larger existing total addressable market while gaining market share in our core patient experience market.

With that, let me turn the call back over to Linda to review our financial performance and then open the call to your questions.

Linda

Thank you, Kevin.

Revenue for the third quarter 2023 increased slightly compared to the third quarter of 2022.

We ended the quarter with $144.3 million in 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.

Operating income decreased by 10% for the third quarter of 2023 compared to the third quarter of 2022, primarily due to growth in certain costs exceeding revenue growth. Increased investments were made in marketing expenses of $343,000 to expand brand recognition and support sales development and additional cyber security and other software services of $292,000. In addition, we incurred $661,000 of expense in non-recurring state tax incentive adjustments.

The effective tax rate in the third quarter of 2023 was 22% compared to 23% in 2022, primarily due to lower state income taxes of $313,000 partially offset by decreased tax benefits of $138,000 from the exercise of share-based compensation awards.

Operating margin grew by 0.3% over the second quarter of 2023 due to revenue growth outpacing operating expense growth. The workforce reductions and other cost alignment changes implemented during the quarter will enable continued margin improvement in future quarters.

The Company remains well positioned to execute the entire range of capital allocation alternatives, including funding innovation and growth investments, shareholder dividends and share repurchases. At September 30, 2023, the Company had approximately $20 million in net debt and $25 million available on the line of credit after funding $3.7 million for innovation and growth, $27.5 million for dividend payments, and $310,000 for share repurchases in the third quarter.

That concludes my comments for this morning. I’ll now turn the call back to Kevin.

Kevin

Thank you, Linda.

This completes our prepared remarks, so operator I will now ask you to open the call to any questions.

Closing Statement – Kevin

Thank you for your time today. We look forward to sharing our results again next quarter.