Note 4 - Other Revenues

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Other Revenues [Text Block]

Note 4 – Other Revenues

Other revenues are outlined in the table below. Revenues from rental income include health care real estate properties owned by us and leased to third party operators. Revenues from management and accounting services include fees provided to manage and provide accounting services to other healthcare operators. Revenues from insurance services include premiums for workers’ compensation and professional liability insurance policies that our wholly owned insurance subsidiaries have written for certain healthcare operators to which we provide management or accounting services. "Other" revenues include miscellaneous health care related earnings (in thousands). 

	Year Ended December 31,
	2023		2022		2021
Rental income	$	23,926	$	23,451	$	22,717
Management and accounting service fees		18,544		16,160		17,139
Insurance services		3,857		4,766		5,019
Other		1,373		819		525
Gain on sale of property and equipment		6,230		–		–
Total other revenues	$	53,930	$	45,196	$	45,400

Rental Income 

The Company leases real estate assets consisting of skilled nursing facilities and assisted living facilities to third party operators. Additionally, we sublease four Florida skilled nursing facilities included in our lease from National Health Investors (“NHI”) as noted in Note 7 – Long Term Leases. Rental income reflected in the consolidated statements of operations consisted of the following (in thousands):

	Year Ended December 31,
	2023		2022		2021
Operating lease payments	$	22,928	$	23,039	$	22,609
Variable lease payments		998		412		108
Total rental income	$	23,926	$	23,451	$	22,717

Variable lease payments are based on revenue increases as compared to a base year.

The following table sets forth the undiscounted cash flows for future minimum lease payments receivable for leases in effect at December 31, 2023 (in thousands):

2024	$	22,933
2025		22,824
2026		20,314
2027		73
2028		6
Thereafter		–
Total future minimum lease payments	$	66,150

Management Fees from National

We have managed skilled nursing facilities for National since 1988, and we currently manage five facilities. See Note 18 regarding our relationship with National.

During 2023, 2022 and 2021, we recognized approximately $5,200,000, $4,332,000, and $3,915,000, respectively, of management fees and interest on management fees. Unrecognized and unpaid management fees and interest on management fees from National total $19,049,000 and $18,843,000 at December 31, 2023 and 2022, respectively.

The unpaid fees from these five facilities, because collection of substantially all of the contract consideration was not probable when the performance obligation was satisfied, will be recognized as revenues only in the period in which the amounts are received. Under the terms of our management agreement with National, the payment of these fees to us may be subordinated to other expenditures of the five skilled nursing facilities. We continue to manage these facilities so that we may be able to collect our fees in the future and because the incremental savings from discontinuing services to a facility may be small compared to the potential benefit. We may receive payment for the unrecognized management fees in whole or in part in the future only if cash flows from the operating and investing activities of centers or proceeds from the sale of the centers are sufficient to pay the fees. There can be no assurance that such future improved cash flows will occur.

Management Fees and Financial and Accounting Services for Other Healthcare Centers

We provide management services and financial and accounting services to certain healthcare facilities (in addition to the five National centers) operated by third party owners. For the years ended December 31, 2023, 2022 and 2021, we recognized management fees and financial and accounting fees of $13,344,000, $11,828,000, and $13,224,000 from these centers, respectively.

Insurance Services

For workers’ compensation insurance services, the premium revenues reflected in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 were $2,611,000, $2,689,000, and $2,974,000, respectively. Associated losses and expenses are reflected in the consolidated statements of operations as "Salaries, wages and benefits."

For professional liability insurance services, the premium revenues reflected in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 were $1,246,000, $2,077,000, and $2,045,000, respectively. Associated losses and expenses including those for self–insurance are included in the consolidated statements of operations as "Other operating costs and expenses".

Gain on Sale of Property and Equipment

In 2023, we contributed land to a newly-formed limited liability company resulting in an equity interest in the new entity. The fair value of the land contributed to the new entity was $8,000,000. The related cost basis of the contributed land was $1,770,000, which resulted in a gain of $6,230,000.