National Research Corporation Announces Second Quarter 2018 Results

National Research Corporation

National Research Corporation (NASDAQ:NRC) today announced results for the second quarter of 2018.

Digital VOC Platform highlights:

• VOC contract value increased to $33 million
• Year-to-date platform revenue increased to 23%, up from 11% year-over-year
• Platform differentiation continues to drive new client sales activity

Remarking on Company performance, Michael D. Hays, chief executive officer of National Research Corporation said, “We ended the first half of the year exceeding the total dollar value of new client wins in all of 2017. Our VOC platform, combined with unmatched product extensions, is capturing the spend of legacy patient satisfaction vendors.”

Kevin Karas, chief financial officer commented, “Second quarter revenue decreased 1.5% from prior year in line with earlier visibility. We are expecting third quarter revenue growth in the 4% to 5% range compared to the third quarter of 2017 based on the trend in contract value growth.  It is important to note that second quarter results reflect the financial impact of the recapitalization that was approved by shareholders on April 16, 2018. The recapitalization impact included additional bank financing, legal fees, accelerated share-based compensation expense, income tax benefits, adjustments to shareholder’s equity and adjustments to the earnings-per-share calculation.”

Revenue for the quarter ended June 30, 2018, was $28.0 million, compared to $28.4 million for the same quarter in 2017. Net income for the quarter ended June 30, 2018, was $7.9 million, compared to $5.8 million for the quarter ended June 30, 2017. Diluted earnings per share increased to $0.28 for the common shares (formerly Class A) and decreased to $0.26 for Class B shares for the quarter ended June 30, 2018, from diluted earnings per share of $0.13 for Class A shares and $0.80 for Class B shares for the quarter ended June 30, 2017. Due to the recapitalization transaction on April 17, 2018, income has been allocated to both classes of shares through April 16, and allocated only to common stock (formerly Class A) after April 16. 

A listen-only simulcast of National Research Corporation’s 2018 second quarter conference call will be available online at http://edge.media-server.com/m6/p/2sqp4p7k on August 8, 2018, 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 37 years, National Research Corporation has been a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations in the United States and Canada.  The Company’s solutions enable its clients to understand the voice of the customer with greater clarity, immediacy and depth.

This press release includes “forward-looking” statements related to the Company that can generally be identified as describing the Company’s future plans, objectives or goals.  Such forward-looking statements are subject to 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 factors that could affect the Company’s future results, please see the Company’s filings with the Securities and Exchange Commission.

 

NATIONAL RESEARCH CORPORATION AND SUBSIDIARYUnaudited Condensed Consolidated Statements of Income(In thousands, except per share data)

	Three months ended    June 30,										Six months ended    June 30,
	2018				2017						2018				2017
Revenue	$	28,017			$	28,435					$	59,034			$	58,710
Operating expenses:
Direct expenses		10,996				11,939						23,904				24,439
Selling, general and administrative		7,940				6,905						15,808				13,591
Depreciation and amortization		1,325				1,139						2,608				2,244
Total operating expenses		20,261				19,983						42,320				40,274
Operating income		7,756				8,452						16,714				18,436
Other income (expense):
Interest income		9				15						54				29
Interest expense		(439	)			(23			)			(447	)			(50			)
Other, net		493				27						464				35
Total other income (expense)		63				19						71				14
Income before income taxes		7,819				8,471						16,785				18,450
Provision (benefit) for income taxes		(129	)			2,719						1,531				6,178
Net income	$	7,948			$	5,752					$	15,254			$	12,272
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Common (formerly Class A)	$	0.29			$	0.14					$	0.47			$	0.29
Class B	$	0.27			$	0.82					$	1.31			$	1.75
Diluted Earnings Per Share:
Common (formerly Class A)	$	0.28			$	0.13					$	0.45			$	0.28
Class B	$	0.26			$	0.80					$	1.27			$	1.71
Weighted average shares and share equivalents outstanding
Common (formerly Class A) - basic		23,957				20,752						22,429				20,745
Class B - basic		3,527				3,514						3,527				3,514
Common (formerly Class A) - diluted		24,846				21,525						23,350				21,404
Class B - diluted		3,620				3,591						3,628				3,584

 

  

NATIONAL RESEARCH CORPORATION AND SUBSIDIARYUnaudited Condensed Consolidated Balance Sheets(Dollars in thousands, except per share amounts and par value)

	Jun. 30,				Dec. 31,
	2018				2017
ASSETS
Current Assets:
Cash and cash equivalents	$	6,698			$	34,733
Accounts receivable, net		10,689				14,806
Income taxes receivable		1,713				375
Other current assets		4,533				2,345
Total Current Assets		23,633				52,259
Property and equipment, net		13,320				12,359
Goodwill		57,913				58,021
Deferred contract costs		3,369				--
Other, net		4,650				4,677
Total Assets	$	102,885			$	127,316
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,710			$	3,546
Deferred revenue		16,660				16,878
Accrued compensation		4,669				6,597
Dividends payable		4,206				4,222
Income taxes payable		97				--
Notes payable		3,575				1,067
Total Current Liabilities		32,917				32,310
Non-Current Liabilities		43,151				4,965
Total Liabilities		76,068				37,275
Shareholders’ Equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		--				--
Common stock (formerly Class A Common stock) $0.001 par value; authorized 60,000,000 shares,   issued 29,794,307 in 2018 and 25,835,230 in 2017, outstanding 24,783,983 in 2018 and 20,936,703 in 2017		30				26
Class B Common stock, $0.001 par value; 4,319,256 issued and 3,535,238 outstanding in 2017		--				4
Additional paid-in capital		155,614				51,025
Retained earnings		(99,810	)			77,574
Accumulated other comprehensive loss		(2,333	)			(1,635	)
Treasury stock		(26,684	)			(36,953	)
Total Shareholders’ Equity		26,817				90,041
Total Liabilities and Shareholders’ Equity	$	102,885			$	127,316

 

Contact:   Kevin R. Karas   Chief Financial Officer402-475-2525