Breaking Down National HealthCare Corporation (NHC) Financial Health: Key Insights for Investors

You're looking at National HealthCare Corporation (NHC) and trying to figure out if the strong top-line growth is defintely translating into shareholder value, and honestly, the Q3 2025 numbers give us a mixed but actionable signal. The company is clearly executing on its expansion strategy, pushing net operating revenues up 12.5% year-over-year to a solid $382,661,000 for the quarter, which brings the year-to-date revenue to around US$1.13 billion; that's great operational momentum, especially with same-facility revenue up 8.7%. But, while adjusted diluted earnings per share (EPS) jumped to $1.58, the GAAP net income saw a slight dip, so we need to drill down into the cost management and the impact of the recent White Oak Management acquisition. The biggest near-term risk, though, is the evolving leadership transition, but still, the push into behavioral health offers a clear growth lever that could justify the higher end of the current, wide fair value estimates.

Revenue Analysis

You're looking at National HealthCare Corporation (NHC) and seeing a strong top-line number, and you'd be right: the company's trailing twelve months (TTM) revenue as of Q3 2025 hit a robust $1.50 billion, marking a 22.67% year-over-year growth. This isn't just organic growth; it's a clear mix of strategic expansion and solid execution in core services, but you need to know where that money is defintely coming from.

The primary revenue stream for National HealthCare Corporation is its comprehensive suite of patient services, which is typical for a major healthcare provider. These are your core business segments, collectively falling under what the company reports as Net Patient Revenues. For example, in the first quarter of 2025, Net Patient Revenues accounted for $361.6 million of the total $373.7 million in net operating revenues, with the remaining $12.1 million coming from Other Revenues. This shows that the overwhelming majority of the business-about 96.8% in Q1 2025-is driven by direct patient care.

National HealthCare Corporation operates a diverse portfolio of facilities and services. This diversification helps stabilize cash flow, which is crucial in the volatile healthcare industry. The key services contributing to that primary revenue stream include:

• Skilled nursing facilities (80 locations with 10,329 beds as of November 2025).
• Assisted and independent living communities (35 total locations).
• Home care and hospice agencies (67 total agencies).
• Behavioral health hospitals (three locations).

When you map the near-term risks and opportunities, the growth story is compelling, but it's also uneven. The overall TTM growth rate of 22.67% is impressive, but quarterly performance shows the impact of a major acquisition rolling off the year-over-year comparison. Here's the quick math on quarterly net operating revenue growth:

You can see the deceleration in the third quarter, but still, a 12.5% increase is strong. The company's revenue for the first nine months of 2025 totaled $1.13 billion. That's a solid run.

The biggest change in the revenue picture came from the August 1, 2024, acquisition of White Oak Management, Inc., which added 22 healthcare operations to the portfolio. That acquisition is what turbo-charged the Q1 and Q2 2025 growth rates. But, and this is important, National HealthCare Corporation is also seeing robust same-facility net operating revenue growth-that's the organic part of the story. Same-facility revenue grew by 9.6% in Q2 2025 and 8.7% in Q3 2025, showing that existing operations are performing well too. The challenge now is to maintain that organic growth rate as the boost from the White Oak acquisition annualizes and drops out of the year-over-year comparison. If you want to dig deeper into who's betting on this growth, you should check out Exploring National HealthCare Corporation (NHC) Investor Profile: Who's Buying and Why?

Profitability Metrics

You're looking at National HealthCare Corporation (NHC) because you see the demographic tailwinds in senior care, but the real question is whether they can convert that demand into sustainable profit. The short answer is yes, they are, and with margins that significantly outpace the broader healthcare services sector in 2025.

For the first nine months of 2025, National HealthCare Corporation has generated a total revenue of over $1.131 billion, demonstrating strong top-line growth driven by same-facility revenue increases and the strategic acquisition of White Oak Management, Inc. in 2024. This expansion is defintely working, but you need to see how efficiently they manage costs across their skilled nursing, assisted living, and homecare operations.

Here's the quick math on their core profitability ratios for the near-term:

• Gross Profit Margin: The Q1 2025 Gross Profit Margin was approximately 39%, which is a solid indicator of their ability to manage the direct costs of providing care, like supplies and non-administrative labor.
• Operating Profit Margin: For the nine months ending September 30, 2025, the Operating Profit Margin was a robust 8.42%. (Here's the quick math: $95.2 million in Income from Operations on $1.131 billion in revenue).
• Net Profit Margin: The Net Profit Margin for the same period was essentially flat at 8.41%, reflecting minimal drag from non-operating expenses like interest and taxes, which is a good sign of financial health.

The operational efficiency story here is compelling. National HealthCare Corporation's 9M 2025 Operating Margin of 8.42% is dramatically higher than the industry median operating margin for health systems, which Fitch Ratings and other analysts forecast to be between 1% and 2% for the full year 2025. This gap shows NHC's strong cost management and pricing power relative to peers. The company's focus on a diverse service mix-including the higher-margin homecare and hospice segments-helps keep that gross margin high and stable.

Still, you need to watch the trends. While the top-line revenue is up, the GAAP (Generally Accepted Accounting Principles) net income has fluctuated quarter-to-quarter, falling slightly in Q2 and Q3 2025 compared to the prior year's period, largely due to non-operational items like unrealized gains and losses in their marketable equity securities portfolio. This is where you look at the adjusted numbers.

The company's adjusted net income tells a clearer story of operational improvement, with adjusted diluted Earnings Per Share (EPS) for Q3 2025 rising to $1.58 from $1.27 in the prior year's quarter, an increase of 24.3%. This non-GAAP (non-Generally Accepted Accounting Principles) metric strips out those volatile investment gains/losses, showing that the core business is actually accelerating its profit generation. The trend is clear: the underlying business is getting more profitable, even if the headline GAAP number is choppy.

What this estimate hides is the continued pressure from labor costs, which remain elevated industry-wide, but National HealthCare Corporation has managed this well, as evidenced by their superior Operating Margin. To understand the strategic drivers behind these numbers, you should review the Mission Statement, Vision, & Core Values of National HealthCare Corporation (NHC).

The concrete next step for any investor is to track the Q4 2025 earnings release, specifically looking for management commentary on labor expense control and how the integration of the White Oak acquisition continues to affect the Gross Margin line.

Debt vs. Equity Structure

You need to know how National HealthCare Corporation (NHC) funds its growth, because a low debt load means more financial flexibility when the market gets rough. The direct takeaway here is that NHC maintains an exceptionally conservative capital structure, relying heavily on equity and internal cash flow, not debt, to finance operations and expansion.

For the most recent quarter ending September 2025, NHC's total debt is remarkably modest. This low leverage is a deliberate choice, giving them a significant advantage over peers who are more capital-intensive. The total debt is approximately $128 million, which breaks down into two main components:

• Short-Term Debt & Capital Lease Obligations: Around $41 million.
• Long-Term Debt & Capital Lease Obligations: Approximately $87 million.

This is a very clean balance sheet. They're definitely not leaning on the banks.

Leverage Ratios and Industry Comparison

The Debt-to-Equity (D/E) ratio is the clearest measure of financial leverage (how much debt a company uses to fund its assets relative to the value of shareholders' equity). Using the total debt of $128 million and the Q1 2025 stockholders' equity of approximately $1.00 billion, NHC's D/E ratio is about 12.8% (or 0.128). This is a very low figure, even for the typically less-leveraged healthcare sector.

To put this in perspective, while the broader Healthcare Providers & Services industry median Debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is around 2.37, NHC's equivalent ratio as of September 2025 is only 0.48. The company has four times the earnings power to cover its debt compared to the industry median. This conservative approach means lower interest expense risk and high solvency, which is exactly what you want to see in a long-term care operator.

Balancing Debt and Equity for Growth

NHC's strategy is clear: they prioritize equity funding and retained earnings over heavy borrowing. This is a crucial distinction. The company is actively reducing its already low debt, with payments of debt totaling $-101 million over the trailing twelve months ending September 2025. This active paydown is a strong signal of management's focus on financial health.

The company does use debt strategically, however. They have a $50 million unsecured revolving credit facility, established in May 2023, which is primarily for working capital and opportunistic acquisitions. This facility acts as a liquidity buffer, giving them access to capital without the drag of substantial long-term interest payments. The balance is simple: use equity and cash for core growth, and a small, flexible credit line for short-term needs or bolt-on acquisitions. This financial strength also gives them the flexibility to manage significant operational events, like the upcoming 2027 master lease expiration with National Health Investors (NHI), by potentially purchasing properties outright instead of being forced into unfavorable rent increases. You can read more about the operational context in the full post: Breaking Down National HealthCare Corporation (NHC) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking at National HealthCare Corporation (NHC) and want to know if they have the cash to cover their near-term bills. That's smart. Liquidity-a company's ability to meet its short-term obligations-is the bedrock of financial stability, and NHC's latest numbers through the third quarter of 2025 show a solid, healthy position.

The quick answer is yes, their liquidity is strong. We see this immediately in their key ratios. For the quarter ended September 30, 2025, National HealthCare Corporation had a Current Ratio of 1.75. This means the company holds $1.75 in current assets (cash, receivables, etc.) for every $1.00 in current liabilities (short-term debt, payables). A ratio well above 1.0 is defintely a green light.

The Quick Ratio (Acid-Test Ratio), a more conservative measure that strips out less-liquid assets like inventory, stood at 1.72 as of Q3 2025. This tells you that even without selling any inventory, NHC has $1.72 in highly liquid assets to cover every $1.00 of short-term debt. This is significantly better than the Healthcare Providers & Services industry median of 1.29, suggesting superior short-term financial strength.

Working Capital and Cash Flow Trends

The strength in those ratios flows directly into the working capital position. As of the end of Q3 2025, National HealthCare Corporation's working capital-current assets minus current liabilities-was approximately $211.5 million (Current Assets of $493.5 million minus Current Liabilities of $282.0 million). More importantly, the trend is positive: the change in working capital over the trailing twelve months (TTM) ended September 2025 was a positive inflow of $30 million. This indicates efficient management of short-term assets and liabilities, converting operational activity into readily available cash.

Here's the quick math on their cash flow statements, which tells the real story of where the money is coming from and going:

• Operating Cash Flow (CFO): The TTM figure through Q3 2025 was a strong inflow of $181 million. This is the core engine of the business, showing robust cash generation from their primary operations-running skilled nursing, assisted living, and home care services.
• Investing Cash Flow (CFI): This is where the company spends to grow. We saw a significant outflow in 2024, approximately $236.69 million, primarily driven by the acquisition of White Oak Management, Inc. That's a strategic investment, not a sign of operational distress. Expect continued, smaller outflows as they maintain and upgrade their extensive portfolio of 80 skilled nursing facilities and other properties.
• Financing Cash Flow (CFF): The TTM figure through Q3 2025 was an outflow of $-112 million. This outflow is a healthy sign for investors, as it's largely driven by two things: paying down debt (a $37 million net debt reduction in Q3 2025 alone) and paying dividends to shareholders (a $10 million dividend outflow in Q3 2025).

Near-Term Risks and Opportunities

The clear action here is that National HealthCare Corporation's liquidity is a significant strength, not a concern. The cash flow from operations is powerful enough to cover both capital expenditures (CapEx) and shareholder returns, plus pay down debt. The only near-term risk to watch is the integration of the 2024 White Oak acquisition, which is still being digested, but the positive cash flow suggests they are managing it well. The opportunity is that this strong liquidity provides the capital for further strategic acquisitions or facility modernization without needing to raise significant new debt.

For a deeper dive into how this liquidity impacts the overall valuation, you can read the full post here: Breaking Down National HealthCare Corporation (NHC) Financial Health: Key Insights for Investors

Valuation Analysis

You're looking at National HealthCare Corporation (NHC) and asking the crucial question: Is it a value play, or is the market pricing in too much optimism? The quick answer is that NHC appears to be fairly valued to slightly undervalued based on traditional metrics, especially when you consider its strong cash flow and recent revenue growth. The lack of broad analyst coverage, however, means you have to do the heavy lifting yourself.

As of mid-November 2025, the stock price sits at $124.93. Our deep dive into the 2025 fiscal year data shows a company with solid operational performance, but the valuation picture is mixed, which is often the case in the healthcare provider space.

Key Valuation Multiples: A Closer Look

To assess NHC's true worth, we need to look beyond the headline price and examine the core valuation multiples (ratios). These metrics tell us how expensive the company is relative to its earnings, assets, and cash flow. Here's the quick math on the trailing twelve months (TTM) data:

• Price-to-Earnings (P/E) Ratio: At 18.96, NHC is trading below the US Healthcare industry average of 21.6x. This suggests it's a good value relative to its peers on an earnings basis.
• Price-to-Book (P/B) Ratio: With a stock price of $124.93 and a book value per share of $67.87, the P/B ratio is approximately 1.84. This is a reasonable number for a company with significant real estate and tangible assets, indicating investors aren't paying an excessive premium for the balance sheet.
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric, which is excellent for comparing capital-intensive businesses like healthcare operators, is currently 10.57. This is a defintely healthy figure, showing the company's operating cash flow generation is strong relative to its total enterprise value.

The low P/E relative to the industry average points to potential undervaluation, or perhaps just a lack of market excitement. You need to decide which it is.

Stock Performance and Income Stream

The stock's trajectory over the last year has been volatile but generally positive. NHC's stock price has traded in a 52-week range between a low of $89.14 and a high of $133.03, showing significant movement. While the stock has seen a slight decrease of -0.83% over the last year, it has still posted a strong increase of 20.32% in 2025. That's a solid return.

For income-focused investors, NHC remains a reliable dividend payer. The annual dividend is $2.56 per share, giving a current dividend yield of 2.00%. The payout ratio is a conservative 39.03%, meaning the company retains most of its earnings for growth and reinvestment, making the dividend very sustainable. This aligns with their long-term strategy, which you can read more about in their Mission Statement, Vision, & Core Values of National HealthCare Corporation (NHC).

The Analyst View: A Blind Spot

Here's where things get interesting: The analyst community largely ignores NHC. There is a notable absence of widespread analyst ratings or a consensus price target. This lack of coverage is a double-edged sword. It means the stock isn't being chased by the big institutional money, but it also suggests that the market may be overlooking a potential opportunity.

One analysis suggests the stock is trading 'Significantly Below Fair Value' by more than 20%, which aligns with the lower-than-average P/E. Still, without a consensus 'Buy,' 'Hold,' or 'Sell' rating, you must rely heavily on your own due diligence and conviction in the company's operational strength.

Risk Factors

You're looking at National HealthCare Corporation (NHC) because the senior healthcare market looks like a clear demographic win, but like any seasoned investor, you know that revenue growth doesn't insulate you from risk. The company's recent filings, including the November 2025 10-Q, highlight several critical near-term risks you need to map to your investment thesis. These aren't just boilerplate warnings; they directly impact the bottom line, especially when you see a dip in GAAP net income despite rising revenue.

For the nine months ended September 30, 2025, NHC reported revenue of approximately $1.13 billion, which is strong, but the Q3 2025 GAAP net income was $39,239,000, a slight dip compared to the same period in the prior year. This tells you that cost and regulatory pressures are real, even with solid top-line growth.

Operational Headwinds: The Labor and Cost Squeeze

The biggest internal challenge NHC faces-and honestly, this is true across the entire healthcare sector-is the workforce crisis. They are struggling to recruit and retain qualified healthcare professionals, which directly impacts their ability to maintain desirable patient census levels and service quality. Here's the quick math: if you can't staff your facilities properly, you can't fill your beds, and your revenue per facility drops. Plus, the costs associated with trying to fix this are surging.

In Q2 2025, for example, the rise in expenses, especially salaries, wages, and benefits, was a major factor in the GAAP net income falling to $23.72 million from the previous year's figure, even though net operating revenues hit $374.91 million. You need to watch that expense line. It's defintely a key operational risk.

• Staffing shortages limit patient capacity.
• Rising wages compress profit margins.
• Recruitment costs drain cash flow.

External Risks: Regulatory and Reimbursement Uncertainty

The external environment is a minefield of regulatory complexity. NHC operates in a highly regulated space, meaning continuous changes in healthcare laws and government reimbursement programs like Medicare and Medicaid pose a constant threat. While recent rate increases have been favorable, the uncertainty surrounding state and federal healthcare funding is a structural weakness. The government is also increasingly focused on fraud, waste, and abuse, with the Department of Justice securing nearly $2.7 billion in False Claims Act settlements and judgments in 2023, a historical high. This intense scrutiny means a higher risk of legal costs and settlements for any large provider.

The potential for changes to key provisions of the Affordable Care Act (ACA), like the expiration of premium tax credits at the end of 2025, could also impact the broader healthcare landscape and patient coverage, though the direct effect on NHC's primary segments is less clear. Still, regulatory risk is a permanent fixture in this industry.

Financial and Strategic Concentration Risks

NHC's investment portfolio has a substantial concentration in National Health Investors, Inc. (NHI), which is a real estate investment trust (REIT) that owns many of NHC's properties. This exposure means NHC's financial stability is, to some extent, tied to NHI's performance. This concentration risk became more tangible when an NHC affiliate was notified of a default under a master lease with NHI before September 13, 2025, due to non-monetary compliance issues. That kind of issue injects short-term risk around lease compliance and partner dynamics that you shouldn't overlook.

To mitigate some of these growth and operational risks, NHC has been executing a clear expansion strategy. The acquisition of White Oak Management, Inc., which added 22 healthcare operations, was a significant move that helped boost Q1 2025 net operating revenues to $373.7 million, a 25.7% increase year-over-year. This strategic growth is their counter-move against margin pressures, but it also introduces integration risk. For more on the financial specifics, check out the full post: Breaking Down National HealthCare Corporation (NHC) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at National HealthCare Corporation (NHC) and seeing strong revenue growth, but you need to know where the next dollar is coming from. The core takeaway is that NHC's growth will be driven by its integrated care model and strategic acquisitions, even as it manages near-term margin pressure.

The company's net operating revenues for the last twelve months ending September 30, 2025, hit approximately $1.50 billion, a clear indicator of successful expansion. This growth isn't just organic; it's a calculated mix of internal strength and external moves. The August 2024 acquisition of White Oak Management, Inc., which added 22 healthcare operations, was a significant growth driver, contributing to the 12.5% year-over-year revenue jump in Q3 2025.

Key Growth Drivers and Earnings Estimates

NHC's future revenue is anchored by two main factors: demographic tailwinds and its ability to capture more patient days through its diversified service portfolio. The company's Q3 2025 performance showed an 8.7% increase in same-facility net operating revenues, which is a defintely healthy sign of operational efficiency.

Here's the quick math on profitability: while GAAP net income saw a slight dip to $39.239 million in Q3 2025, the adjusted diluted earnings per share (EPS), which strips out volatile items like unrealized investment gains, actually rose a strong 24.3% to $1.58. This suggests the operational business is performing well, despite higher costs like wages and benefits. The trailing twelve-month EPS is sitting at $4.33, which gives you a solid baseline for the company's earning power.

• Market Expansion: Targeting new geographic areas with high senior population growth.
• Behavioral Health: Expansion into this high-demand segment is a key potential growth lever.
• Regulatory Tailwinds: Favorable changes, like the net increase in Medicare Part A payments for skilled nursing facilities for fiscal year 2026, will boost reimbursement rates.

Competitive Advantages: The Integrated Model

NHC is not just a collection of facilities; it operates an integrated service model, which is its primary competitive advantage (moat). They offer a continuum of care services-skilled nursing, assisted and independent living, homecare, and hospice. This model keeps residents in the NHC ecosystem longer, transitioning them from one level of care to the next as their needs evolve. Plus, their established brand and strong reputation, built over decades, give them an edge in attracting new residents in the Southeast U.S. markets where they operate.

What this estimate hides, though, is the ongoing challenge of workforce retention, a persistent issue across the entire healthcare sector. High operating costs, mainly due to salaries, wages, and benefits, are what put pressure on GAAP net income, so watch that cost management closely.

For a deeper dive into the company's financial stability, check out the full post: Breaking Down National HealthCare Corporation (NHC) Financial Health: Key Insights for Investors

Your next step is to monitor the Q4 2025 earnings call for management's commentary on 2026 guidance, specifically their plan to offset rising labor costs and the progress of their behavioral health expansion.