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Delaware
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001-35929
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47-0634000
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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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1245 Q Street, Lincoln, Nebraska
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68508
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(Address of principal executive offices)
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(Zip Code)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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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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☐
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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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$0.001 Par Value Common Stock
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NRC
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The NASDAQ Stock Market
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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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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 November 1, 2022, 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, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.
On November 2, 2022, 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, 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/89036554.
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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: November 3, 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 third quarter ended September 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 November 2, 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
THIRD QUARTER 2022 RESULTS
LINCOLN, Nebraska (November 1, 2022) — National Research Corporation, dba NRC Health, (NASDAQ:NRC) today announced results for the third quarter 2022.
Regarding the Company’s 2022 third quarter financial performance, Kevin Karas, Chief Financial Officer, said, “We continued to grow revenue from new and existing customers in our core offerings, including our new Human Understanding Program. Overall revenue was approximately flat compared with the 2021 quarter due to the phase out of our Canadian operations and a decline in other non-core offerings. From a margin standpoint, investments in innovation initiatives, marketing and associate retention, increased operating expenses for the quarter. In addition, for the quarter, we paid $5.9 million in dividends and $3.6 million related to share repurchases.”
Revenue for the third quarter ended September 30, 2022, was $37.7 million, compared to $37.8 million for the same quarter in 2021. Net income for the quarter ended September 30, 2022, was $8.3 million, compared to $9.7 million for the quarter ended September 30, 2021.
Diluted earnings per share decreased to $0.33 for the quarter ended September 30, 2022, from diluted earnings per share of $0.38 for the quarter ended September 30, 2021.
A live simulcast of National Research Corporation’s 2022 third quarter conference call will be available online at https://events.q4inc.com/attendee/890036554 on November 2, 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, NRC Health (NASDAQ: NRC) has been committed to achieving Human Understanding and bringing healthcare organizations closer to their customers than ever before by illuminating and improving the key moments that define an experience and build trust. Guided by their uniquely empathic heritage, proprietary methods, skilled associates, and holistic approach, NRC Health helps its customers design experiences that exceed expectations, inspire loyalty, and improve well-being among patients, residents, physicians, nurses, and staff. For more information, email info@nrchealth.com, or visit www.nrchealth.com.
NRC Announces Third Quarter 2022 Results
Page 2
November 1, 2022
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 Third Quarter 2022 Results
Page 3
November 1, 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 |
Nine months ended |
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2022 |
2021 |
2022 |
2021 |
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Revenue |
$ | 37,691 | $ | 37,767 | $ | 113,424 | $ | 109,656 | ||||||||
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Operating expenses: |
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Direct |
14,524 | 13,707 | 43,062 | 38,184 | ||||||||||||
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Selling, general and administrative |
10,762 | 9,523 | 32,159 | 29,060 | ||||||||||||
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Depreciation, amortization and impairment |
1,296 | 1,399 | 3,902 | 5,016 | ||||||||||||
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Total operating expenses |
26,582 | 24,629 | 79,123 | 72,260 | ||||||||||||
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Operating income |
11,109 | 13,138 | 34,301 | 37,396 | ||||||||||||
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Other income (expense): |
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Interest income |
15 | 4 | 34 | 10 | ||||||||||||
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Interest expense |
(288 |
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(413 |
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(923 |
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(1,268 |
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Other, net |
11 | (105 |
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(69 |
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(8 |
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Total other income (expense) |
(262 |
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(514 |
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(958 |
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(1,266 |
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Income before income taxes |
10,847 | 12,624 | 33,343 | 36,130 | ||||||||||||
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Provision for income taxes |
2,549 | 2,967 | 8,184 | 8,297 | ||||||||||||
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Net income |
$ | 8,298 | $ | 9,657 | $ | 25,159 | $ | 27,833 | ||||||||
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Earnings Per Share of Common Stock: |
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Basic Earnings Per Share |
$ | 0.34 | $ | 0.38 | $ | 1.01 | $ | 1.09 | ||||||||
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Diluted Earnings Per Share |
$ | 0.33 | $ | 0.38 | $ | 1.00 | $ | 1.08 | ||||||||
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Weighted average shares and share equivalents outstanding: |
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Basic |
24,716 | 25,427 | 25,014 | 25,423 | ||||||||||||
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Diluted |
24,847 | 25,650 | 25,147 | 25,655 | ||||||||||||
NRC Announces Third Quarter 2022 Results
Page 4
November 1, 2022
NATIONAL RESEARCH CORPORATION AND SUBSIDIARY
Unaudited Condensed Consolidated Balance Sheets
(Dollars in thousands, except share amounts and par value)
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September 30, 2022 |
December 31, 2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 28,392 | $ | 54,361 | ||||
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Accounts receivable, net |
15,378 | 13,728 | ||||||
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Other current assets |
5,335 | 5,618 | ||||||
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Total current assets |
49,105 | 73,707 | ||||||
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Property and equipment, net |
15,761 | 12,391 | ||||||
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Goodwill |
61,614 | 61,614 | ||||||
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Other, net |
8,503 | 9,828 | ||||||
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Total assets |
$ | 134,983 | $ | 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 |
$ | 4,434 | $ | 4,278 | ||||
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Accounts payable and accrued expenses |
5,765 | 7,393 | ||||||
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Accrued compensation |
6,023 | 7,139 | ||||||
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Deferred revenue |
17,373 | 17,213 | ||||||
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Dividends payable |
5,926 | 3,044 | ||||||
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Other current liabilities |
1,563 | 1,321 | ||||||
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Total current liabilities |
41,084 | 40,388 | ||||||
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Notes payable, net of current portion and unamortized debt issuance costs |
18,837 | 22,269 | ||||||
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Other non-current liabilities |
7,296 | 9,546 | ||||||
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Total liabilities |
67,217 | 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 30,922,181 in 2022 and 30,898,600 in 2021, outstanding 24,691,246 in 2022 and 25,361,409 in 2021 |
31 | 31 | ||||||
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Additional paid-in capital |
175,162 | 173,942 | ||||||
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Retained earnings (accumulated deficit) |
(28,870 |
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(36,112 |
) |
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Accumulated other comprehensive loss, foreign currency translation adjustment |
(2,608 |
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(2,375 |
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Treasury stock |
(75,949 |
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(50,149 |
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Total shareholders’ equity |
67,766 | 85,337 | ||||||
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Total liabilities and shareholders’ equity |
$ | 134,983 | $ | 157,540 | ||||
Exhibit 99.2
Kevin:
Thank you, ___________, and welcome everyone to National Research Corporation’s 2022 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.
During the third quarter we continued to see growth in the interest and adoption of our Human Understanding Program. This Program provides care teams insights to understand each patient’s fears and expectations and use that information at every interaction to understand what matters most and treat each patient as a unique person. Last quarter we noted the adoption of the Human Understanding Program by Novant Health and the focus at our annual Symposium in August. Our Symposium event was extremely successful, drawing over 500 attendees, both virtually and in person, with the theme of Human Understanding – Connecting Through Stories. The increased understanding and interest building throughout our client base is driving more growth in our sales pipeline and resulted in several more client adoptions in the third quarter. We are also focused on hiring more sales associate resources to accelerate our growth in contract value.
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.
We ended the third quarter with $148.0 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 third quarter 2022 ending TRCV decreased by 2% 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. As of September 30, 2022, our core solution TRCV growth rate was a 2% increase compared to September 30, 2021.
Revenue growth for the third quarter 2022 decreased compared to the third quarter of 2021 primarily due to a $660,000 revenue reduction from the scheduled closure of our Canadian location. Revenue in the US increased $584,000 mainly from growth in the recurring revenues in our existing client base.
Third quarter 2022 operating income declined by 15% compared to the same period in 2021, as a result of slightly lower revenue and an increase in operating expenses of approximately $2 million as we continue to allocate more resources to support the long-term success of the business.
Marketing expense increased by approximately $1 million in the third quarter of 2022 compared to the third quarter of 2021 to support programs building brand awareness and sales lead generation. We believe these investments will result in driving increased interest in the Human Understanding Program.
Associate expenses increased by approximately $700,000 in the third quarter 2022 compared to the prior year as we continue to focus on retaining and growing our talent base and supporting our most important asset, that being our associates.
Investments in automation initiatives resulted in an increase in expense of approximately $300,000 in the third quarter. We believe that continued automation is essential to enable our associates to better leverage their skills and add more value to our clients.
Third quarter 2022 income tax expense decreased by $418,000 compared to third quarter 2021 as a result of lower operating income. The effective tax rate in the third quarter for both 2022 and 2021 was 24%.
Net income for the third quarter 2022, was $8.3 million, compared to $9.7 million for same period in 2021.
For the first nine months of 2022, revenue increased by 3% to $113.4 million compared to $109.7 million in 2021. Net income for the first nine months of 2022 decreased to $25.2 million compared to $27.8 million for the first nine 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 and internal projects, as the preferred use of capital. The Company funded $9.3 million for innovation and growth purposes in the first nine months of 2022 in addition to quarterly dividend payments to shareholders totaling $15.0 million and $25.3 million for share repurchases.
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.
