National Healthcare Corp has a market cap of $475.6 million; its shares were traded at around $34.59 with a P/E ratio of 13.8 and P/S ratio of 0.7. The dividend yield of National Healthcare Corp stocks is 3.2%. National Healthcare Corp had an annual average earning growth of 5.2% over the past 10 years. GuruFocus rated National Healthcare Corp the business predictability rank of 3.5-star.NHC is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Potential Recognition of Deferred Income - During 1988, we sold the assets of eight long-term health care centers to National Health Corporation (National), our administrative general partner at the time of the sale. The resulting profit of $15,745,000 was deferred. $10,000,000 of the deferred gain and related deferred income taxes of $4,000,000 were recognized as income in December 2007 with the collection of the $10,000,000 note from National. $3,745,000 of the deferred gain has been amortized into income on a straight-line basis over the 20-year management contract period. Additional deferred income of $2,000,000 will be recognized when the Company no longer has an obligation to advance a $2,000,000 working capital loan which obligation has been extended until January 20, 2018 with the extension of the management agreement with National to that date.
Total costs and expenses for the 2010 second quarter compared to the 2009 second quarter increased $7,182,000 or 4.7% to $161,017,000 from $153,835,000. Salaries, wages and benefits, the largest operating costs of this service company, increased $5,805,000 or 6.3% to $97,680,000 from $91,875,000. Other operating expenses increased $937,000 or 2.0% to $48,358,000 for the 2010 period compared to $47,421,000 for the 2009 period. Rent expense increased $106,000 or 1.3% to $8,170,000 compared to $8,064,000 for the 2009 period. Depreciation and amortization increased $376,000 or 5.9% to $6,663,000 from $6,287,000. Interest costs decreased $42,000 to $146,000.
Total costs and expenses for the 2010 six-month period compared to the 2009 six-month period increased $13,868,000 or 4.5% to $320,815,000 from $306,947,000. Salaries, wages and benefits, the largest operating costs of this service company, increased $11,155,000 or 6.1% to $193,756,000 from $182,601,000. Other operating expenses increased $1,972,000 or 2.1% to $97,361,000 for the 2010 period compared to $95,389,000 for the 2009 period. Rent expense increased $316,000 or 1.9% to $16,348,000 compared to $16,032,000 for the 2009 period. Depreciation and amortization increased $560,000 or 4.5% to $13,090,000 from $12,530,000. Interest costs decreased $135,000 to $260,000.
Increases in salaries, wages and benefits are due to the increased staffing from the opening of our new 120-bed skilled care and dementia center in Bluffton, South Carolina and our new 45-unit assisted living community in Mauldin, South Carolina ($1,346,000), the acquisition and staffing of four new homecare locations in South Carolina and one homecare location in Tennessee ($1,096,000), increased costs for therapist services ($1,944,000), an increased provision for workers compensation claims ($2,161,000), and inflationary increases. The increase in other operating expenses was also due to the opening of the two new facilities and five new homecare locations mentioned above ($2,257,000).
Investing Activities - Cash used in investing activities totaled $26,001,000 and $14,134,000 for the six months ended June 30, 2010 and 2009, respectively. Cash used for property and equipment additions was $26,007,000 for the six months ended June 30, 2010 and $19,961,000 in the comparable period in 2009. Cash provided by net collections of notes receivable was $759,000 in 2010 compared to $3,412,000 in 2009. The enhanced cash fund balance was liquidated in December 2009; therefore, there was no activity during the first six months of 2010. There has been $48,356,000 funded from our restricted cash and cash equivalents into restricted marketable securities for the six months ended June 30, 2010. Cash was used in purchasing restricted marketable securities of $64,701,000 and cash was provided from the sale of marketable securities of $15,592,000 for the first six months of 2010.
Financing Activities - Net cash used in financing activities totaled $10,281,000 in the six months ended June 30, 2010 compared to $6,277,000 net cash provided by financing activities in the same period in 2009. Cash used for dividend payments to common and preferred stockholders totaled $11,468,000. In the prior period, cash used for dividend payments to common and preferred stockholders totaled $10,734,000. Tax benefits from exercise of stock options provided cash of $189,000 in 2010 and $3,582,000 in 2009. In the current period, $1,009,000 of cash was provided by the issuance of common stock compared to $13,534,000 in the same period last year.
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