National HealthCare (NHC 3.96%), a leading provider of post-acute healthcare services across the southeastern United States, released its second quarter 2025 results on August 8, 2025. The headline news was a sharp jump in revenue and strong adjusted profits, supported by new facilities from a recent acquisition, with GAAP net operating revenue reaching $374.9 million--up 24.7% compared to the prior year. Non-GAAP earnings per share rose to $1.65, up 64.7% year over year, though GAAP earnings per share declined to $1.52 from $1.73 in Q2 2024, due to unrealized losses in the company’s investment portfolio. There were no Wall Street estimates prior to this release, but results showed clear operational and financial progress. Operational earnings (non-GAAP) improved, the facility network expanded, and same-facility growth remained strong, with same-facility net operating revenues increasing 9.6%, though cost pressures and investment volatility appeared on the bottom line.
| Metric | Q2 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|
| Revenue (GAAP) | $374.9 million | $300.7 million | 24.7% |
| EPS (Non-GAAP) | $1.65 | $1.00 | 65.0% |
| Net Income (Non-GAAP) | $25.7 million | $15.6 million | 64.7% |
| EPS (GAAP) | $1.52 | $1.73 | (12.1%) |
| Cash, Cash Equivalents and Marketable Securities | $257.6 million | $216.2 million | 19.2% |
Business Overview and Key Success Factors
National HealthCare operates a broad network of healthcare facilities, including skilled nursing, assisted living, independent living, behavioral health hospitals, homecare, and hospice locations. Its primary business involves providing post-acute care, or care after hospitalization, helping patients recover or manage chronic conditions. It generates revenue from Medicare, Medicaid, private insurance, and self-pay patients, with government reimbursements playing a major role in its operations.
Recently, the company’s focus has been on expanding its network and maintaining high-quality patient care. Regulatory compliance remains a top priority, as it enables the company to receive payments from government programs. Another key factor for success is quality ratings: 57% of the company’s skilled nursing facilities scored 4 or 5 stars in the federal Centers for Medicare & Medicaid Services (CMS) rating system as of December 31, 2024--higher than the industry average of 35%. Diversifying services also helps reduce risk and strengthen its position in the market.
Quarter Highlights: Growth Drivers and Financial Developments
The quarter’s GAAP revenue jump to $374.9 million was supported by both organic and acquisition-driven growth. Same-facility net operating revenues increased 9.6%. The completed purchase of White Oak Management, Inc. on August 1, 2024, added 15 skilled nursing facilities, further boosting facility and patient counts.
Compared to Q2 2024, performance in skilled nursing, the company’s most important service line, saw growth on multiple fronts. The number of “patient days”--a key measure that counts each day a patient occupies a bed--rose 28.7% compared to Q2 2024. This increase included not just new facility additions but also reflected resilient usage at existing locations. Prices per patient day, known as per diems, increased across all categories compared to Q2 2024: Medicare rates climbed 6.4% compared to Q2 2024. Managed care per diem rates increased from $447.96 to $486.17 compared to Q2 2024. These pricing changes are crucial, as Medicare rates are set by federal policy, and Medicaid rates are established by each state with federal approval. Meanwhile, the company exited three underperforming Missouri skilled nursing facilities earlier in 2024.
Margins and profit trends showed a mixed picture. Income from operations (GAAP) increased sharply to $34.1 million--up 51.4% compared to Q2 2024. Non-GAAP net income, which excludes unrealized gains and losses in investments and certain one-time costs, surged 64.7%. However, GAAP net income (which includes these investment swings) actually fell 11.6%. The main reason for this decline in GAAP net income was unrealized losses on marketable equity securities, compared to investment gains in Q2 2024. Costs grew alongside revenues, with salaries, wages, and benefits up 25.8% to $226.5 million compared to Q2 2024.
The company’s service portfolio continues to diversify. Its total footprint now includes 80 skilled nursing facilities, 26 assisted living communities, 9 independent living facilities, 3 behavioral health hospitals, 34 homecare agencies, and 33 hospice agencies, spanning nine states. This diversity means the company can serve a broader range of patient needs and is less dependent on single service lines for growth. Management also reported another $3.6 million in one-time gains from property sales. There was no government stimulus income booked, whereas Q2 2024 included $9.4 million in such aid. The quarterly dividend was raised 4.9% to $0.64 per share.
Looking Ahead and Management Commentary
The company did not provide specific financial guidance for upcoming quarters or the full year. Management cited ongoing uncertainty around government reimbursement rate changes, new regulations, and operational risks. These factors reflect the highly regulated nature of the healthcare industry, where shifts in Medicare and Medicaid rules can quickly affect company finances.
Investors should watch how well the company integrates its new White Oak facilities and manages labor costs, as these will impact future margins. Risks include changes to government healthcare programs, cost inflation, and any impacts from ongoing acquisition activities. The company also remains exposed to swings in the value of its investment portfolio, which can create large quarterly fluctuations in reported profits.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
