<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 of 15(d)
of the Securities Exchange Act of 1934
For quarter ended September 30, 1994 Commission file number 33-9881
------------------ -------
NATIONAL HEALTHCORP L.P.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware 62-1292855
- - - --------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
100 Vine Street
Murfreesboro, TN 37130
- - - --------------------------------- -------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (615) 890-2020
-----------------
Indicate by check mark whether the registrant
(1) Has filed all reports required to be filed by Section 13 or 15(d), of
the Securities Exchange Act of 1934 during the preceding 12 months.
Yes x No
--- ---
(2) Has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
7,796,583 units were outstanding as of September 30, 1994.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NATIONAL HEALTHCORP L.P.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES:
Net patient revenues . . . . . . . . . . . . . $ 69,051 $ 55,801 $195,535 $ 161,562
Gain on sale of investment . . . . . . . . . . -- 24,768 -- 24,768
Other revenues . . . . . . . . . . . . . . . . 6,513 6,442 19,755 17,009
-------- -------- -------- ---------
Net revenues . . . . . . . . . . . . . . 75,564 87,011 215,290 203,339
-------- -------- -------- ---------
COSTS AND EXPENSES:
Salaries, wages and benefits . . . . . . . . . 40,465 32,461 117,157 93,597
Other operating . . . . . . . . . . . . . . . . 24,432 20,493 68,447 59,011
Depreciation and amortization . . . . . . . . . 3,549 2,996 10,262 8,675
Interest . . . . . . . . . . . . . . . . . . . 3,054 3,041 8,687 8,785
-------- -------- -------- ---------
Total costs and expenses . . . . . . . . 71,500 58,991 204,553 170,068
-------- -------- -------- ---------
NET INCOME . . . . . . . . . . . . . . . . . . . $ 4,064 $ 28,020 $ 10,737 $ 33,271
======== ======== ======== =========
EARNINGS PER UNIT:
Primary . . . . . . . . . . . . . . . . . . . . $ .52 $ 3.61 $ 1.37 $ 4.29
======== ======== ======== =========
Fully diluted . . . . . . . . . . . . . . . . . $ .46 $ 2.93 $ 1.23 $ 3.56
======== ======== ======== =========
WEIGHTED AVERAGE UNITS OUTSTANDING:
Primary . . . . . . . . . . . . . . . . . . . . 7,822,962 7,755,299 7,834,197 7,753,402
Fully diluted . . . . . . . . . . . . . . . . . 9,813,174 9,728,453 9,813,110 9,726,916
CASH DISTRIBUTIONS PAID PER UNIT:
Regular . . . . . . . . . . . . . . . . . . . . $ .31 $ .20 $ .86 $ .56
======== ======== ======== =========
Special . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ 1.10 $ --
======== ======== ======== =========
NET INCOME ALLOCABLE TO PARTNERS:
General partners . . . . . . . . . . . . . . . $ 41 $ 280 $ 107 $ 333
Limited partners . . . . . . . . . . . . . . . 4,023 27,740 10,630 32,938
-------- -------- -------- ---------
$ 4,064 $ 28,020 $ 10,737 $ 33,271
======== ======== ======== =========
</TABLE>
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these statements.
2
<PAGE> 3
NATIONAL HEALTHCORP L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
------
SEPTEMBER 30 DECEMBER 31
1994 1993
------------ -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 538 $ 145
Cash held by trustees . . . . . . . . . . . . . . . . . . . . . . . . . . 1,413 1,289
Debt and equity securities . . . . . . . . . . . . . . . . . . . . . . . 14,513 5,670
Accounts receivable, less allowance for
doubtful accounts of $3,328 and $2,612 . . . . . . . . . . . . . . . . 36,599 30,395
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,532 4,219
Note receivable from NHI . . . . . . . . . . . . . . . . . . . . . . . . -- 26,700
Loan participation agreements . . . . . . . . . . . . . . . . . . . . . . 25,222 37,379
Inventory at lower of cost (first-in,
first-out method) or market . . . . . . . . . . . . . . . . . . . . . . 2,871 2,933
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . 1,365 561
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 89,053 109,291
-------- --------
PROPERTY AND EQUIPMENT AND ASSETS UNDER
ARRANGEMENT WITH OTHER PARTIES:
Property and equipment at cost . . . . . . . . . . . . . . . . . . . . . 128,606 108,663
Less accumulated depreciation and
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,518) (24,216)
Assets under arrangement with other parties . . . . . . . . . . . . . . . 101,936 106,488
-------- --------
Net property, equipment and assets under
arrangement with other parties . . . . . . . . . . . . . . . . . 201,024 190,935
-------- --------
OTHER ASSETS:
Bond reserve funds, mortgage replacement
reserves and other deposits . . . . . . . . . . . . . . . . . . . . . . 1,703 1,663
Unamortized financing costs . . . . . . . . . . . . . . . . . . . . . . . 2,883 3,085
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,543 25,000
Notes receivable from National . . . . . . . . . . . . . . . . . . . . . 12,336 11,861
Minority equity investments and other . . . . . . . . . . . . . . . . . . 7,410 2,845
-------- --------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . 56,875 44,454
-------- --------
$346,952 $344,680
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
3
<PAGE> 4
NATIONAL HEALTHCORP L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIABILITIES AND CAPITAL
-----------------------
SEPTEMBER 30 DECEMBER 31
1994 1993
------------ -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . $ 3,512 $ 3,569
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 5,228 5,357
Accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,270 13,981
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,753 988
Distributions payable . . . . . . . . . . . . . . . . . . . . . . . . . . -- 8,576
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 9,017 7,327
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 36,780 39,798
-------- --------
LONG-TERM DEBT, less current portion . . . . . . . . . . . . . . . . . . . 56,808 54,625
DEBT SERVICED BY OTHER PARTIES, less current portion . . . . . . . . . . . 110,314 112,116
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES . . . . . . . . . . . . . . 786 767
COMMITMENTS, CONTINGENCIES AND GUARANTEES
SUBORDINATED CONVERTIBLE NOTES . . . . . . . . . . . . . . . . . . . . . . 30,000 30,000
DEFERRED INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,657 14,848
PARTNERS' CAPITAL:
General partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,069 1,027
Limited partners and unrealized gains on
Securities, less notes receivable . . . . . . . . . . . . . . . . 96,538 91,499
-------- --------
Total partners' capital . . . . . . . . . . . . . . . . . . . . . 97,607 92,526
-------- --------
$346,952 $344,680
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
4
<PAGE> 5
NATIONAL HEALTHCORP L.P.
INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-----------------
1994 1993
---- ----
(in thousands)
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,737 $ 33,271
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,947 8,521
Provision for doubtful accounts and notes . . . . . . . . . . . . . . . . . . . 1,655 1,282
Amortization of intangibles and deferred charges . . . . . . . . . . . . . . . 634 440
Amortization of deferred income . . . . . . . . . . . . . . . . . . . . . . . . (271) (168)
Equity in earnings of unconsolidated investments . . . . . . . . . . . . . . . (222) (2,443)
Distributions from unconsolidated investments . . . . . . . . . . . . . . . . . 180 2,303
Gain on sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . -- (24,773)
Changes in assets and liabilities:
Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . (7,859) (2,993)
Decrease in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 102
(Increase) Decrease in prepaid expenses and other assets . . . . . . . . . . . (804) 1,452
Increase (Decrease) in trade accounts payable . . . . . . . . . . . . . . . . . (684) 128
Increase in accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . 3,289 1,852
Increase in accrued interest payable . . . . . . . . . . . . . . . . . . . . . 765 89
Increase in other current liabilities . . . . . . . . . . . . . . . . . . . . . 1,690 5,138
-------- --------
19,119 24,201
-------- --------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Additions to and acquisitions of property and equipment, net . . . . . . . . . . (20,018) (22,991)
Decrease in long-term notes receivable . . . . . . . . . . . . . . . . . . . . . 28,526 17,735
Increase in minority equity investments and other . . . . . . . . . . . . . . . . (4,757) (143)
Increase in debt and equity securities . . . . . . . . . . . . . . . . . . . . . (8,843) (55,930)
Unrealized gain on debt
and equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 --
Sale of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 32,991
-------- --------
(4,528) (28,338)
-------- --------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from debt issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,535 8,519
Increase in cash held by trustee . . . . . . . . . . . . . . . . . . . . . . . . (124) (156)
Increase in minority interest in subsidiaries . . . . . . . . . . . . . . . . . . 19 26
Increase in bond reserve funds, mortgage
replacement reserves and other deposits . . . . . . . . . . . . . . . . . . . . (40) (129)
Collection of receivables from exercise of options . . . . . . . . . . . . . . . 422 938
Payments on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,788) (2,863)
Cash distributions to partners . . . . . . . . . . . . . . . . . . . . . . . . . (15,222) (4,333)
Increase in financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (77)
-------- --------
(14,198) 1,925
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . 393 (2,212)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . 145 13,012
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . $ 538 $ 10,800
======== ========
SUPPLEMENTAL INFORMATION:
CASH PAYMENTS FOR INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . . . $ 7,922 $ 8,651
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
5
<PAGE> 6
NATIONAL HEALTHCORP L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN
PARTNERS' CAPITAL FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1994
AND 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
RECEIVABLES
FROM SALE OF UNREALIZED
PARTNERSHIP PARTNERSHIP GAINS ON GENERAL LIMITED PARTNERS'
UNITS UNITS SECURITIES PARTNERS PARTNERS TOTAL
----- ----- ---------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 7,796,433 $(15,134) $ -- $1,027 $106,633 $92,526
Net income -- -- -- 107 10,630 10,737
Collection of receivables -- 422 -- -- 422
Other 150 -- -- 1 3 4
Unrealized gains
on securities -- -- 564 -- -- 564
Cash distributions
($.86 per unit) -- (66) (6,580) (6,646)
--------- -------- ----- ------ -------- -------
BALANCE AT SEPT. 30, 1994 7,796,583 (14,712) 564 1,069 110,686 97,607
========= ======== ===== ====== ======== =======
BALANCE AT DECEMBER 31, 1992 7,748,592 $(16,174) $ -- $ 791 $ 83,305 $67,922
Net income -- -- -- 333 32,938 33,271
Collection of receivables -- 938 -- -- -- 938
Other 4,610 -- -- 1 81 82
Cash distributions
($.56 per unit) -- -- -- (43) (4,290) (4,333)
--------- -------- ----- ------ -------- -------
BALANCE AT SEPT. 30, 1993 7,753,202 $(15,236) $ -- $1,082 $112,034 $97,880
========= ======== ===== ====== ======== =======
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
6
<PAGE> 7
NATIONAL HEALTHCORP L.P.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Note 1 - CONSOLIDATED FINANCIAL STATEMENTS:
The financial statements for the nine months ended September 30, 1994
and 1993, which have not been examined by independent public accountants,
reflect, in the opinion of management, all adjustments necessary to present
fairly the data for such periods. The results of the operations for the nine
months ended September 30, 1994 are not necessarily indicative of the results
that may be expected for the entire fiscal year ended December 31, 1994. The
interim condensed balance sheet at December 31, 1993 is taken from the audited
financial statements at that date. The interim condensed financial statements
should be read in conjunction with the consolidated financial statements,
including the notes thereto, for the periods ended December 31, 1993, December
31, 1992, and December 31, 1991.
Note 2 - OTHER REVENUES:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------------- --------------------
1994 1993 1994 1993
---- ---- ---- ----
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Revenue from managed centers $ 4,494 $ 4,317 $12,579 $10,113
Guarantee fees 218 250 710 573
Advisory fee from NHI 458 406 1,370 1,219
Earnings on securities (208) 724 191 1,378
Equity in earnings of unconsolidated
investments 95 (342) 212 575
Interest income 1,152 780 3,791 2,248
Other 304 307 902 903
------- ------- ------- -------
$ 6,513 $ 6,442 $19,755 $17,009
======= ======= ======= =======
</TABLE>
Revenues from managed centers include management fees and interest
income on notes receivable from the managed centers. "Other" revenues include
non-health care related earnings.
Note 3 - SALE OF INVESTMENT:
In August 1993, the Company sold its interest in VHA Long Term Care
("VHA LTC") for approximately $32,987,000 of cash. The transaction resulted in
a gain of approximately $24,768,000 ($3.19 per unit, primary; $2.55 per unit,
fully diluted). Prior to the sale, income from the VHA LTC investment was
recognized under the equity method of accounting. Management believes that the
disposition of the investment has not materially affected the earnings of the
Company.
7
<PAGE> 8
NATIONAL HEALTHCORP L.P.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Note 4 - DEBT AND EQUITY SECURITIES:
Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting
for Certain Investments in Debt and Equity Securities" was issued by the
Financial Accounting Standards Board effective for fiscal years beginning after
December 15, 1993. As required by the Statement, securities are classified as
trading, held-to-maturity or available for sale. Trading securities are bought
and held principally for the purpose of selling them in the near term.
Securities are classified as held-to-maturity when the Company has both the
positive intent and ability to hold them to maturity. All other securities are
classified as available for sale. The Company considers its investments in debt
and equity securities as available for sale securities and unrealized gains and
losses are recorded in partner's capital in accordance with the Statement.
Application of SFAS No. 115 to prior periods is not permitted and,
accordingly, prior financial statements have not been restated to reflect the
change in accounting principle. The ending balance of partner's capital for
September 30, 1994 was increased by approximately $564,000 to reflect the net
unrealized investment gain on securities classified as available for sale which
were previously carried at amortized cost or lower of cost or market.
The amortized cost and estimated fair value of securities classified as
available for sale were as follows at September 30, 1994 (in thousands):
<TABLE>
<CAPTION>
Amortized Unrealized Unrealized Fair
Cost Gain Loss Value
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Equity securities $ 7,706 $1,039 $407 $ 8,338
U.S. Government agency
securities 468 -- 68 400
Municipal debt securities 5,775 -- -- 5,775
------- ------ ---- -------
$13,949 $1,039 $475 $14,513
======= ====== ==== =======
</TABLE>
The amortized cost and estimated fair value of securities classified as
available for sale at September 30, 1994, by contractual maturity are shown
below (in thousands):
<TABLE>
<CAPTION>
Maturities: Amortized Fair
Cost Value
--------- -------
<S> <C> <C>
Within One Year $ 100 $ 100
One to Five Years 950 950
Six to Ten Years 1,600 1,600
Over Ten Years 3,593 3,525
Other securities without stated
maturity 7,706 8,338
------- -------
Total securities available for sale $13,949 $14,513
======= =======
</TABLE>
8
<PAGE> 9
NATIONAL HEALTHCORP L.P.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Proceeds from the sale of investments in debt and equity securities
during the period ended September 30, 1994 were $3,481,000. Gross investment
gains of $253,000 and gross investment losses of $451,000 were realized on these
sales. Realized gains and losses from securities sales are determined on the
specific identification of the securities.
The adoption of the Statement did not have a material effect on the
Company's financial position or results of operations.
Note 5 - GUARANTEES:
In order to obtain management agreements and to facilitate the
construction or acquisition of certain health care centers which the Partnership
manages for others, the Partnership has guaranteed some or all of the debt
(principal and interest) on those centers. For this service the Partnership
charges an annual guarantee fee of 1% to 2% of the outstanding principal balance
guaranteed, which fee is in addition to the Partnership's management fee. The
principal amount outstanding under the guarantees is approximately $76,947,000
at September 30, 1994 with interest rates ranging from approximately 3.2% to
10.0%.
Note 6 - ACQUISITIONS:
In February, 1994, the Partnership acquired the stock of Spectrum
Enterprises, Inc. and Spectrum Private Nursing Services, Inc. for a total
consideration of approximately $4,253,000. Spectrum Enterprises, Inc. owns and
operates eleven homecare programs located in Panama City, Port St. Joe,
Carrabelle, Crawfordville, Tallahassee, Madison, Perry, Blountstown, Marianna,
Quincy and Chipley, Florida. Spectrum Private Nursing Services, Inc. owns and
operates two homecare programs located in Panama City and Tallahassee, Florida
which provides services to private payors exclusively. Former shareholders have
signed a covenant not to compete. The Partnership is amortizing the cost of the
covenant not to compete over its term (96 months).
In February, 1994, the Partnership purchased for approximately
$6,000,000 a 120-bed long-term health care center located in Naples, Florida.
Note 7 - UNIT OPTIONS:
NHC has Incentive Option Plans which provide for the granting of options
to key employees and directors to purchase units at no less than market value on
the date of grant. On April 22, 1994, options to purchase 495,500 units were
granted at $25.12 per unit. At September 30, 1994, options to purchase 5,000
units and 495,500 units at $11.25 and $25.12, respectively, remain outstanding.
9
<PAGE> 10
NATIONAL HEALTHCORP L.P.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
Overview
At September 30, 1994, National HealthCorp L.P. operates and manages 96
long-term health care centers with 12,303 beds in nine states. The Company
provides nursing care as well as ancillary therapy services to patients in a
variety of settings including long-term nursing centers, managed care specialty
units, subacute care units, Alzheimer's care units, homecare programs, and
facilities for assisted living. The Company also operates retirement centers.
Results of Operations
Last year's third quarter and nine month period through September 30
included a one-time gain from the sale of NHC's interest in VHA Long-Term Care.
The gain increased both revenues and net income $24.8 million ($3.19 per unit,
primary; $2.55 per unit, fully diluted) and, for purposes of comparison, is
excluded from the discussion of results of operations below.
Three Months Ended September 30, 1994 Compared to Three Months Ended September
30, 1993.
Net revenues for the three months ended September 30, 1994 increased
$13.3 million or 21.4% to $75.6 million from $62.2 million for the three months
ended September 30, 1993. Net patient revenues increased $13.3 million or 23.7%
in the 1994 period as compared to the 1993 period. Other revenues increased
1.1% to $6.5 million.
The increased revenues for the quarter reflect the continued growth of
operations. Compared to the quarter a year ago, NHC has increased the number of
owned or leased long-term care beds from 5,913 beds to 6,290 beds. The number
of long-term care beds managed for others has increased from 5,174 beds to 6,013
beds. The number of homecare locations has increased from 17 locations to 28
locations. The Company has also put increased emphasis upon and expanded its
more profitable managed care, acute care and rehabilitative services. Also
contributing to increased revenues are improvements in both private pay and
third party payor rates.
Total costs and expenses for the 1994 third quarter increased $12.5
million or 21.2% to $71.5 million from $59.0 million. Salaries, wages and
benefits, the largest operating costs of this service company, increased $8.0
million or 24.7% to $40.5 million from $32.5 million. Other operating expenses
increased $3.9 million or 19.2% to $24.4 million for the 1994 third quarter
compared to $20.5 million in the 1993 period. Depreciation and amortization
increased 18.5% to $3.5 million. Interest costs remained flat at approximately
$3.1 million.
Increases in salaries, wages, benefits and other operating expenses are
due to increased numbers of employees because of growth as well as inflationary
wage increases. Depreciation increased as a result of the Company's placing of
newly
10
<PAGE> 11
NATIONAL HEALTHCORP L.P.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Management's Discussion and Analysis of Financial Conditions and Results of
Operations (continued)
constructed assets in service and due to improvements and remodeling at
existing facilities in 1993 and 1994.
The total census at owned and leased centers for the quarter averaged
92.3% compared to an average of 94.1% for the same quarter a year ago.
Nine Months Ended September 30, 1994 Compared to Nine Months Ended September
30, 1993
Net revenues for the nine months ended September 30, 1994 increased
$36.7 million or 20.6% to $215.3 million from $178.6 million for the nine months
ended September 30, 1993. Net patient revenues increased $34.0 million or 21.0%
in the 1994 period as compared to the 1993 period. Other revenues increased
16.1% to $19.8 million.
The increased revenues for the quarter reflect the continued growth of
operations. Compared to the nine months a year ago, NHC has increased the number
of owned or leased long-term care beds from 5,913 beds to 6,290 beds. The
number of long-term care beds managed for others has increased from 5,174 beds
to 6,013 beds. The number of homecare locations has increased from 17 locations
to 28 locations. The Company has also put increased emphasis upon and expanded
its more profitable managed care, acute care and rehabilitative services. Also
contributing to increased revenues are improvements in both private pay and
third party payor rates.
Total costs and expenses for the 1994 nine months increased $34.5
million or 20.3% to $204.6 million from $170.1 million. Salaries, wages and
benefits, the largest operating costs of this service company, increased $23.6
million or 25.2% to $117.2 million from $93.6 million. Other operating expenses
increased $9.4 million or 16.0% to $68.4 million for the 1994 nine months
compared to $59.0 million in the 1993 period. Depreciation and amortization
increased 18.3% to $10.3 million. Interest costs remained flat at approximately
$8.7 million.
Increases in salaries, wages, benefits and other operating expenses are
due to increased numbers of employees because of growth as well as inflationary
wage increases. Depreciation increased as a result of the Company's placing of
newly constructed assets in service and due to improvements and remodeling of
existing facilities in 1993 and 1994.
The total census of owned and leased centers for the nine months
averaged 92.7% compared to an average of 93.8% for the nine months a year ago.
Liquidity and Capital Resources
The Company has generated net cash from operating activities during the
first nine months of 1994 in the amount of $19.1 million. The funds were used,
along with
11
<PAGE> 12
NATIONAL HEALTHCORP L.P.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(Unaudited)
Management's Discussion and Analysis of Financial Conditions and Results of
Operations (continued)
$28.5 million collected on long-term notes receivable and $3.5 million from an
increase in long-term obligations to make additions to and acquisitions of
property and equipment in the amount of $20.0 million, to make additional
investments in debt and equity securities of $13.6 million, to make payments of
cash distributions to partners of $15.2 million and to make payments on debt of
$2.8 million.
At September 30, 1994, the Company's ratio of long-term obligations to
convertible debt and capital is 1.3 to 1.
The ratio of current assets to current liabilities is 2.4 to 1. Working
capital is $52.3 million. These financial resources with anticipated funds from
future operations are expected to be adequate to enable the Partnership to meet
its working capital requirements and expansion goals.
Development
During the first nine months of 1994, the Company added a net total of
436 licensed long-term care beds, 80 assisted living beds, additional
rehabilitation space and purchased a Florida-based homecare company. Currently,
NHC has 728 beds under development at 14 health care centers in Florida, South
Carolina, Tennessee, Alabama and Missouri.
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND THE CONSOLIDATED BALANCE
SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 1,951,000
<SECURITIES> 14,513,000
<RECEIVABLES> 71,681,000
<ALLOWANCES> (3,328,000)
<INVENTORY> 2,871,000
<CURRENT-ASSETS> 89,053,000
<PP&E> 275,036,000
<DEPRECIATION> (74,012,000)
<TOTAL-ASSETS> 346,952,000
<CURRENT-LIABILITIES> 36,780,000
<BONDS> 197,122,000
<COMMON> 0
0
0
<OTHER-SE> 97,607,000
<TOTAL-LIABILITY-AND-EQUITY> 346,952,000
<SALES> 0
<TOTAL-REVENUES> 215,290,000
<CGS> 0
<TOTAL-COSTS> 183,949,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,655,000
<INTEREST-EXPENSE> 8,687,000
<INCOME-PRETAX> 10,737,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,737,000
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.23
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