National HealthCare Corporation principally operates long-term health carecenters and home health care programs. Their health care centers provide subacute skilled and intermediate nursing and rehabilitative care. National Healthcare Corp has a market cap of $487.5 million; its shares were traded at around $35.72 with a P/E ratio of 16.4 and P/S ratio of 0.7. The dividend yield of National Healthcare Corp stocks is 2.9%. National Healthcare Corp had an annual average earning growth of 2.3% over the past 5 years.
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 (ANational@), 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 the $2,000,000 working capital loan which obligation was extended until January 20, 2018 with the extension of the management agreement with National to that date.
Total costs and expenses for the 2009 second quarter compared to the 2008 second quarter increased $8,814,000 or 6.1% to $153,835,000 from $145,021,000. Salaries, wages and benefits, the largest operating costs of this service company, increased $5,563,000 or 6.4% to $91,875,000 from $86,312,000. Other operating expenses increased $2,782,000 or 6.2% to $47,421,000 for the 2009 period compared to $44,639,000 in the 2008 period. Rent expense increased $188,000 to $8,064,000 compared to $7,876,000 in the 2008 period. Depreciation and amortization increased $263,000 or 4.4% to $6,287,000 from $6,024,000. Interest costs increased $18,000 to $188,000.
Other revenues decreased $1,786,000 or 5.3% in the six month 2009 period to $31,789,000 from $33,575,000 in the 2008 six month period. Decreases in other revenues include decreased management and accounting services fees ($1,601,000), decreased dividends and other realized gains on securities due to lower dividend rates ($618,000), and decreased rental income ($621,000).
Total costs and expenses for the 2009 six months compared to the 2008 six months increased $14,937,000 or 5.1% to $306,947,000 from $292,010,000. Salaries, wages and benefits, the largest operating costs of this service company, increased $8,748,000 or 5.0% to $182,601,000 from $173,853,000. Other operating expenses increased $5,436,000 or 6.0% to $95,389,000 for the 2009 period compared to $89,953,000 in the 2008 period. Rent expense increased $238,000 to $16,032,000 compared to $15,794,000 in the 2008 period. Depreciation and amortization increased $509,000 or 4.2% to $12,530,000 from $12,021,000. Interest costs increased $6,000 to $395,000.
Investing Activities - Cash used in investing activities totaled $10,672,000 for the six months ended June 30, 2009, as compared to $7,968,000 provided from investing activities for the six months ended June 30, 2008. Cash used for property and equipment additions was $19,961,000 for the six months ended June 30, 2009 and $14,612,000 in the comparable period in 2008. Investments in notes receivable totaled $278,000 in 2009 compared to $2,746,000 in 2008. Cash provided by net collections of notes receivable was $3,412,000 in 2009 compared to $4,450,000 in 2008. Collections of our investment in the cash fund in liquidation balance totaled $2,693,000 in the first six months of 2009 compared to $17,258,000 in 2008.
Financing Activities - Net cash provided by financing activities totaled $6,277,000 in the six months ended June 30, 2009 compared to $8,583,000 net cash used for the same period in 2008. Cash used for payments of debt totaled $1,000 and dividend payments to common and preferred shareholders totaled $10,734.000. In the prior year, cash used for payments of debt totaled $7,432,000, and dividend payments to common and preferred shareholders totaled $9,355,000. Tax benefits from exercise of stock options provided cash of $3,582,000 in 2009 and $314,000 in 2008. In the current period, $13,534,000 of cash was provided by the issuance of common stock compared to $492,000 in the same period last year.
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