Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

February 8, 2024

National Research Corporation

(Exact name of registrant as specified in its charter)

Delaware	001-35929	47-0634000
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1245 Q Street, Lincoln, Nebraska	68508
(Address of principal executive offices)	(Zip Code)

(402) 475-2525

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
$.001 Par Value Common Stock	NRC	The NASDAQ Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02	Results of Operations and Financial Condition.

	On February 13, 2024, National Research Corporation, a Delaware corporation (the "Company"), issued a press release announcing its financial and operating results for the fourth quarter and year ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein. On February 14, 2024, the Company will hold a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the fourth quarter and year ended December 31, 2023. An archive of such conference call and simulcast and the related question and answer session will be available online at https://events.q4inc.com/attendee/823574505.

Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

	On February 8, 2024, Kevin R. Karas, Senior Vice President, Chief Financial Officer, Treasurer and Secretary of the Company notified the Company of his decision to retire effective March 31, 2024. In connection with his retirement, Mr. Karas entered into a Retirement Transition Agreement which provides that he will receive one year of base salary continuation payments from April 1, 2024 through March 31, 2025. The Company and its Board of Directors extend their gratitude to Mr. Karas for his over 13 years of service. Also, on February 8, 2024, the Company’s Board of Directors approved the promotion of Linda Stacy, Vice President of Finance, to the position of Principal Accounting Officer, effective on March 31, 2024. The following is biographical information for Ms. Stacy: Linda Stacy, 53, joined the Company as Accounting Controller in 2006 and was promoted to Vice President of Finance in 2008. From 1999 to 2006, Ms. Stacy served in various roles at MDS Pharma Services, a drug discovery and development company. Ms. Stacy started her career as a Certified Public Accountant at BKD CPAs & Advisors.

Item 9.01	Financial Statements and Exhibits.

	(d)	Exhibits.

	EXHIBIT NUMBER	EXHIBIT DESCRIPTION

	99.1	National Research Corporation press release announcing its financial and operating results for the fourth quarter and year ended December 31, 2023.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

	The information contained in Items 2.02 and 9.01 of this report and the exhibits hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

	The information in Items 2.02, 5.02, and 9.01 of this report and the exhibits hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by forward-looking statements. Please refer to the paragraph at the end of the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NATIONAL RESEARCH CORPORATION
	(Registrant)

Date: February 13, 2024	By:	/s/ Kevin R. Karas
		Kevin R. Karas
		Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary

Exhibit 99.1

1245 Q Street, Lincoln, NE 68508

P: 1 800 388 4264 | F: 402 475 9061

nrchealth.com

Contact:

Kevin R. Karas

Chief Financial Officer

402-475-2525

NATIONAL RESEARCH CORPORATION ANNOUNCES

FOURTH QUARTER AND CALENDAR YEAR 2023 RESULTS

LINCOLN, Nebraska (February 13, 2024) — National Research Corporation, dba NRC Health, (NASDAQ:NRC) today announced results for the fourth quarter 2023.

CEO Commentary

Michael Hays, Chief Executive Officer, commented: “We’re pleased to start 2024 with momentum from another consecutive quarter of growth in new sales and operating margin. We have trimmed non-core service lines, and developed our capability across the patient, customer, and employee experience continuum to focus on our clients’ most important needs. With industry-leading solutions – from C-Suite strategy through The Governance Institute, to customized data benchmarking and analysis, to actionable front-line solutions – NRC is better positioned than ever, and our highest ever Net Promoter Score of 75, a level rarely achieved by any brand, is a testament to delivering value to our partners.”

Mr. Hays continued, “I’m particularly excited by our expanded executive team and growth plan. We expect to roll out new Market Experience, PX, CX, and EX products regularly over the coming year and beyond. Meanwhile, we are ramping up our sales, IT, and innovative product development resources, with a focus on AI enabled solutions, to deliver more to our customers while improving our efficiency. We believe we are strongly positioned to expand Human Understanding across the experience lifecycle to recognize and respond to individuals as consumers, patients, and caregivers. In fulfilling our mission, we believe we are positioned to increase share across historical and expanded markets while creating more opportunity for our associates and value for our stockholders.”

Financial Summary

Kevin Karas, Chief Financial Officer, commented on the financial results, “Diluted earnings per share increased for the fourth straight quarter through a combination of sequentially improving new sales, focused cost control, and lower share count attributable to share repurchases. We continue to focus on returning to revenue growth, expanding our margins, and stockholder returns.”

NRC Announces Fourth Quarter 2023 Results
Page 2
February 13, 2024

For the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022:

●

Diluted earnings per share increased to $0.36 from $0.27. The 2022 period included a $0.10 per share cumulative foreign currency translation expense associated with exiting the Canadian market.

●

Revenue was $38 million in each period, as increased new core sales were offset by reductions in non-core revenue.

From a capital standpoint, the Company remains well-positioned to execute the entire range of capital allocation alternatives, including funding innovation and growth investments, dividends, and share repurchases. During 2023, the Company returned $55 million to stockholders in the form of dividends and stock repurchases, and another $15 million in stock was repurchased in January of 2024. Return on average equity improved to 51% in 2023 from 40% in 2022, primarily resulting from returning capital to stockholders through dividends and stock repurchases.

For the remainder of 2024, capital allocation is expected to focus primarily on growth and innovation initiatives (including facilities renovation) and the regular quarterly dividend. At December 31, 2023, the Company had approximately $30 million of net debt, $30 million available on its revolving line of credit, and $56 million available on its delayed draw term facility.

CFO Retirement

Kevin Karas, Chief Financial Officer, has informed the Company of his intent to retire effective March 31, 2024. Chief Executive Officer, Michael Hays, commented: “We appreciate Kevin’s leadership and contributions over a remarkable 13-years of service. Under Kevin’s watch, the Company’s revenue has more than doubled, the market capitalization of our common stock has quadrupled, and we have returned over $255 million to our stockholders in the form of dividends and stock repurchases. Additionally, his integrity, insistence on quality, and unfailing good nature have reinforced our culture and helped develop a deep and talented team that is ready to assume his responsibilities. Our Vice President of Finance, Linda Stacy, has been promoted to Principal Accounting Officer effective March 31. We are grateful for Kevin’s service and wish him a productive and happy retirement.”

Dividend

The Company’s Board of Directors has declared a quarterly cash dividend of $0.12 (twelve cents) per share payable Monday, April 15, 2024, to shareholders of record as of the close of business on Friday, March 29, 2024.

NRC Announces Fourth Quarter 2023 Results
Page 3
February 13, 2024

Conference Call

A live simulcast of National Research Corporation’s 2023 fourth quarter conference call will be available online at https://events.q4inc.com/attendee/823574505 February 14, 2024, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately one hour later and continue for 30 days.

About NRC

For more than 40 years, NRC Health (NASDAQ: NRC) has led the charge to humanize healthcare and support organizations in their understanding of each unique individual. NRC Health’s commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market research, and emphasis on consumer preferences are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems. For more information, email info@nrchealth.com, or visit www.nrchealth.com.

This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “believes,” “expect,” “focus,” “potential,” “will,” derivations thereof, and similar terms and phrases. In this press release, the statement related to the roll out of new products, future use of AI, our ability to improve efficiency, the potential to expand Human Understanding and increase market share, and future revenue growth, margins, stockholder returns, and capital allocation are forward-looking statements. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements, including those risks and uncertainties as set forth in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2022 and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

NRC Announces Fourth Quarter 2023 Results
Page 4
February 13, 2024

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended December 31						Twelve months ended December 31
	2023			2022			2023			2022

Revenue	$	38,001		$	38,144		$	148,580		$	151,568

Operating expenses:
Direct		13,793			13,987			56,015			57,049
Selling, general and administrative		11,070			10,541			46,621			42,699
Depreciation and amortization		1,429			1,375			5,899			5,277
Total operating expenses		26,292			25,903			108,535			105,025

Operating income		11,709			12,241			40,045			46,543

Other income (expense):
Interest income		41			134			820			168
Interest expense		(269	)		(286	)		(862	)		(1,209	)
Reclassification of cumulative translation into earnings		--			(2,569	)		--			(2,569	)
Other, net		(13	)		(49	)		(41	)		(118	)

Total other income (expense)		(241	)		(2,770	)		(83	)		(3,728	)

Income before income taxes		11,468			9,471			39,962			42,815

Provision for income taxes		2,610			2,830			8,991			11,015

Net income	$	8,858		$	6,641		$	30,971		$	31,800

Earnings Per Share of Common Stock:
Basic Earnings Per Share	$	0.36		$	0.27		$	1.26		$	1.28
Diluted Earnings Per Share	$	0.36		$	0.27		$	1.25		$	1.27

Weighted average shares and share equivalents outstanding:
Basic		24,437			24,648			24,540			24,922
Diluted		24,548			24,775			24,673			25,052

NRC Announces Fourth Quarter 2023 Results
Page 5
February 13, 2024

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts and par value)

	December 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	6,653		$	25,026
Accounts receivable, net		12,378			14,461
Other current assets		5,329			4,229
Total current assets		24,360			43,716

Property and equipment, net		28,205			17,248
Goodwill		61,614			61,614
Other, net		8,258			7,883
Total assets	$	122,437		$	130,461

Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable	$	7,214		$	4,491
Accounts payable and accrued expenses		6,194			5,136
Accrued compensation		3,953			4,551
Deferred revenue		14,834			15,198
Dividends payable		2,906			2,956
Other current liabilities		1,102			1,085
Total current liabilities		36,203			33,417

Notes payable, net of current portion and unamortized debt issuance costs		29,470			17,690
Other non-current liabilities		7,809			7,321
Total liabilities		73,482			58,428

Shareholders’ equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		--			--
Common stock, $0.001 par value; authorized 110,000,000 shares, issued 31,002,919 in 2023 and 30,922,181 in 2022, outstanding 24,219,887 in 2023 and 24,628,173 in 2022		31			31
Additional paid-in capital		178,213			175,453
Retained earnings (accumulated deficit)		(30,530	)		(25,184	)

Treasury stock		(98,759	)		(78,267	)
Total shareholders’ equity		48,955			72,033
Total liabilities and shareholders’ equity	$	122,437		$	130,461

Document And Entity Information	Feb. 08, 2024
Document Information [Line Items]
Entity, Registrant Name	National Research Corporation
Document, Type	8-K
Document, Period End Date	Feb. 08, 2024
Entity, Incorporation, State or Country Code	DE
Entity, File Number	001-35929
Entity, Tax Identification Number	47-0634000
Entity, Address, Address Line One	1245 Q Street
Entity, Address, City or Town	Lincoln
Entity, Address, State or Province	NE
Entity, Address, Postal Zip Code	68508
City Area Code	402
Local Phone Number	475-2525
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	NRC
Security Exchange Name	NASDAQ
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000070487