NATIONAL HEALTHCARE CORP (NHC): what the price requires
At today's price, NATIONAL HEALTHCARE CORP (NHC) is priced for +13.5% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/NHC
Headline
| Field | Value |
|---|---|
| Ticker | NHC |
| Company | NATIONAL HEALTHCARE CORP |
| Current price | $208.99/sh |
| Composition | Inpatient Services 87% / Homecare and Hospice 10% / All Other 3% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.0% |
| Operating margin today | 8.4% |
| Margin compression implied | -5.4pp |
| Implied growth | 13.5% |
| Multiple paid | 23x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.6pp.
Reconcile: at the x-ray's 9.3% required return this reads ~21%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.22σ |
| cohort percentile (of 112 peers) | 56 |
| sustained it ~5 years at this level | 51% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.24x | 5 | expensive |
| Earnings | 2.01x | 5 | expensive |
| Relative | 0.86x | 5 | justifies |
| Growth | 0.83x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $282.54 | 0.74x | yes | FCF base $0.2B, growth 11% (input: historical growth), terminal g 4.0%, WACC 8.7%, 6yr projection |
| DCF Exit Multiple | Growth | $253.15 | 0.83x | yes | Exit EV/EBITDA: 17.5x / 19.5x / 21.5x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $153.46 | 1.36x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.0x / 18.0x / 21.0x (bear / base = reference held flat / bull), EV/EBITDA 14.26x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $84.77 | 2.47x | yes | BV/sh $69.18, ROE (TTM) 11.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $93.45 | 2.24x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $185.92 | 1.12x | yes | Rev $1.5B, growth 11% (input: historical growth; tapered), Terminal P/S: 1.8x / 2.2x / 2.5x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $275.45 | 0.76x | yes | EPS $7.87, growth 35% (input: historical EPS growth), PEG=0.76 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $34.91 | 5.99x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.07B × (1−19%) / WACC 8.7% → EPV (no growth) |
| Residual Income | Asset | $95.15 | 2.20x | yes | BV $69.18 + 5yr PV of (ROE (TTM) 11.3% − Kₑ 9.3%) × BV; BV grows 7.4%/yr |
| Graham Number | Asset | $110.68 | 1.89x | yes | √(22.5 × EPS $7.87 × BVPS $69.18) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $125.19 | 1.67x | yes | EBITDA $0.18B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $107.17 | 1.95x | yes | FCF $168.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $103.98 | 2.01x | yes | SBC-adj FCF $0.16B (FCF $0.17B − SBC $0.00B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $253.94 | 0.82x | yes | EPS $7.87 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $16.94 | 12.34x | yes | BV $69.18 × (ROIC 2.1% / WACC 8.7%) |
| P/Sales Sector | Relative | $241.89 | 0.86x | yes | Revenue $1.53B × sector P/S 2.5x |
| PEG Fair Value | Relative | $295.12 | 0.71x | yes | EPS $7.87 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $85.08 | 2.46x | yes | EPS $7.87 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $45.5m |
| Net debt / NOPAT (after-tax) | -0.44x (net cash) |
| Net debt / operating income (pre-tax) | -0.36x (net cash) |
| Interest coverage | 21.9x |
| Share count CAGR (dilution) | 0.5% |
| Burning cash | no |
Bullet Takeaways
- National HealthCare runs a debt-free balance sheet that is rare in senior care: it carried zero current and long-term debt at the end of the first quarter and held about $258 million in cash and marketable securities, so it owns its operations outright rather than renting them from lenders.
- The biggest specific risk is payor mix: government programs are the core of the revenue, with Medicare alone at 33% of net patient revenue, so a change in Medicare or Medicaid reimbursement rates lands directly on the operating margin, which is already thin at about 8.5%.
- Watch skilled nursing occupancy, which averaged 90.0% in the first quarter, against the demographic tailwind of an aging population that should keep demand for the company's 80 skilled nursing facilities rising.
Bull Case
The one number that defines National HealthCare is its debt. There is none. At the end of the first quarter the company reduced both current and long-term debt to zero, down from $40 million at year end, and held roughly $258 million in cash and marketable securities. In an industry where most operators run on leverage and lease their buildings, a skilled nursing company that owns its operations free of debt is a structural outlier. It means the entire operating cash flow belongs to shareholders rather than being routed to lenders first, and it means a bad reimbursement year is survivable without a refinancing scare. That financial position is the foundation everything else rests on.
The operating business behind it is steady and demographically favored. National HealthCare operates 80 skilled nursing facilities with more than 10,000 beds, plus assisted living, independent living, homecare, hospice, and behavioral health, and skilled nursing occupancy averaged 90.0% in the first quarter. Demand for skilled nursing is tied to an aging population, a slow-moving tailwind that does not depend on the economy. The company's facilities are embedded in the public reimbursement system; its filing notes that all of its skilled nursing facilities are "certified to participate in Medicare," which is the credential required to serve the largest payor base in senior care.
The recent results show operating leverage working in the company's favor. First-quarter revenue rose 2.2% to $381.8 million while costs grew more slowly, lifting GAAP net income to $35.9 million and diluted earnings per share to $2.27, up from $2.07 a year earlier. Management raised the quarterly dividend to 64 cents from 61 cents, funded comfortably out of operating cash flow given the absence of interest payments. For a buyer at today's price, the bull case is a conservatively financed operator in a demand-growing niche, converting modest revenue growth into faster earnings growth and returning the surplus to holders, with a balance sheet that removes the refinancing risk that haunts its leveraged peers.
Bear Case
The uncomfortable truth for a holder is that National HealthCare is a low-margin business whose pricing is set by the government, not by the company. It earns an operating margin of about 8.5%, which is thin, and a large share of its revenue comes from programs whose rates are decided in Washington and state capitals. The filing lays out the payor mix directly, with Medicare at "33%" of net patient revenue and a substantial further share from Medicaid, the state-run program for the indigent. When a payor that large sets your prices, a single unfavorable reimbursement update flows straight to the bottom line, and at an 8.5% margin there is little buffer to absorb it. The debt-free balance sheet protects against insolvency; it does not protect against a rate cut.
The valuation read is where the bear sharpens. The asset-based and earnings-power methods both place the price well above where they land, with the price sitting near twice the earnings-power estimate. Reading the price backward, the market is paying about 23 times operating income, which implies roughly 13% annual operating-profit growth for five years. That is achievable for the company in the near term, but only about half of comparable growers have sustained that pace for five full years, and for a business whose top line grew 2.2% last quarter, 13% operating-profit growth has to come from margin expansion rather than volume. Margin expansion in a labor-intensive, government-priced business is the hardest kind to sustain, because the cost side does not stay quiet.
Labor and revenue collection are the operational pressure points. The cost to retain and replace qualified staff is a structural feature of skilled nursing, and the filing flags that service revenue realization can be uncertain, that the company may make "expenditures related to the provision of services for which we are not paid." Wages are the largest cost in the business, and they tend to rise faster than reimbursement in tight labor markets, which compresses the very margin the price assumes will expand. The bear case is not that National HealthCare is fragile; the debt-free balance sheet makes it durable. The bear case is that the price assumes a margin trajectory that a government-priced, labor-heavy operator rarely delivers for five straight years.
Valuation
What the price assumes is modest growth that has to come from the right place. At today's level the market pays about 23 times operating income, which implies roughly 13% annual operating-profit growth sustained for five years. The framework reads that as within range of what is plausible, and the near-term pace is consistent with what the company has delivered. The subtlety is the source of that growth: with revenue growing only about 2% a year, the implied operating-profit growth must come mostly from margin expansion, so the price is really a bet on costs staying contained relative to reimbursement.
The methods disagree in a way that fits a steady, asset-light-in-spirit operator. The peer-multiple comparisons and the forward-growth methods support the price, reading it as fair against its healthcare-services cohort and against a reasonable growth path. The asset-based and earnings-power methods read it as expensive, with the price near twice the earnings-power estimate. The gap reflects what those methods measure: the asset and earnings-power lenses anchor on the current, thin margin and the modest book value of the operations, while the relative and growth methods credit the demand tailwind and the operating leverage. For a business with a demographic wind at its back, the forward-looking methods deserve weight, but the earnings-power read is the honest warning that the price already embeds margin improvement.
Solvency is the part that needs no qualification, and it is the company's defining strength. National HealthCare carries no debt, holds about $258 million in cash and marketable securities, and generated trailing operating income near $130 million, so interest coverage is effectively limitless and the dividend is funded many times over. A buyer is not underwriting any balance-sheet risk; the entire question is operating. The decisive variable is the margin: if the company keeps growing earnings faster than revenue by holding labor and operating costs below reimbursement, the price is fair; if government rates tighten or wages accelerate, the earnings-power methods that call it expensive will have been right.
Catalysts
The clearest recent catalyst was the first-quarter result and the dividend increase that followed it. National HealthCare reported revenue of $381.8 million, up 2.2% year over year, GAAP net income of $35.9 million, and diluted earnings per share of $2.27, with companywide operating margins improving as salaries, wages, and other operating costs grew more slowly than revenue. The board raised the quarterly dividend to 64 cents from 61 cents, a signal of confidence backed by the debt-free balance sheet.
Reimbursement policy is the catalyst that matters most over the next year, because it sets the company's prices. With Medicare at 33% of net patient revenue and Medicaid a further large share, the annual updates to those programs are the single largest external driver of the margin. Any change in federal or state reimbursement rates feeds directly into a business operating on an 8.5% margin, so the policy calendar is the one to watch.
The operating threads are occupancy and footprint. Skilled nursing occupancy averaged 90.0% in the quarter, and the company operates 80 skilled nursing facilities with more than 10,000 beds alongside its assisted living, homecare, and hospice operations. Whether occupancy holds or rises as the aging population grows, and whether the company keeps labor costs below reimbursement, are the operational catalysts that determine the earnings path.
Peer Cohorts (Per Segment, With Filing Citations)
Inpatient Services (reported)
- ENSG (ENSIGN GROUP, INC)
- (no filing in the citation store)
- SEM (SELECT MEDICAL HOLDINGS CORP)
- (no filing in the citation store)
- ARDT (Ardent Health, Inc.)
- (no filing in the citation store)
- ACHC (Acadia Healthcare Company, Inc.)
- (no filing in the citation store)
- BKD (BROOKDALE SENIOR LIVING INC.)
- (no filing in the citation store)
- PACS (PACS Group, Inc.)
- (no filing in the citation store)
Homecare and Hospice (reported)
- ADUS (Addus HomeCare Corp)
- (no filing in the citation store)
- CHE (CHEMED CORPORATION)
- (no filing in the citation store)
- AVAH (Aveanna Healthcare Holdings Inc.)
- (no filing in the citation store)
- ENSG (ENSIGN GROUP, INC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
NHC Q1 2026 results · company 10-K, fiscal 2024