8-K

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):	May 2, 2006

National Research Corporation

(Exact name of registrant as specified in its charter)

Wisconsin	0-29466	47-0634000
(State or other	(Commission File	(IRS Employer
jurisdiction of	Number)	Identification No.)
incorporation)

1245 Q Street, Lincoln, Nebraska 68508

(Address of principal executive offices, including zip code)

(402) 475-2525

(Registrant’s telephone number)

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))

Item 2.02. Results of Operations and Financial Condition.

        On May 2, 2006, National Research Corporation (the "Company") issued a press release announcing its earnings for the quarter ended March 31, 2006. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

        On May 3, 2006, the Company held a conference call in connection with the Company's announcement of its earnings for the quarter ended March 31, 2006. A copy of the script for such conference call is furnished as Exhibit 99.2 and is incorporated by reference herein. An archive of such conference call and the related question and answer session will be available online at www.earnings.com.

Item 9.01. Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits. The following exhibits are being furnished herewith:

(99.1) Press Release of National Research Corporation, dated May 2, 2006.

(99.2) Script for conference call, held May 3, 2006.

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SIGNATURES

        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.

Date: May 3, 2006

NATIONAL RESEARCH CORPORATION

By: /s/ Patrick E. Beans

       Patrick E. Beans

       Vice President, Treasurer, Secretary and Chief

       Financial Officer

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NATIONAL RESEARCH CORPORATION

Exhibit Index to Current Report on Form 8-K
Dated May 2, 2006

Exhibit
Number

(99.1) Press Release of National Research Corporation, dated May 2, 2006.

(99.2) Script for conference call, held May 3, 2006.

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EX-99.1

1245 “Q” Street
Lincoln, NE 68508
Phone: 402-475-2525
Fax: 402-475-9061

Contact: Patrick E. Beans
Chief Financial Officer
402-475-2525

NATIONAL RESEARCH CORPORATION ANNOUNCES
FIRST QUARTER 2006 RESULTS

Sales Set New Record Under Sales Expansion Plan

LINCOLN, Nebraska (May 2, 2006) — National Research Corporation (NASDAQ/NM:NRCI), a leader in healthcare performance measurement, today announced results for the first quarter ended March 31, 2006.

• Quarterly net new contracts reached $3.8 million

• Quarterly revenues increased by 44%

• Quarterly net income up 63%

• Quarterly earnings per share growth equals 80%

        Commenting on the results, Michael D. Hays, chief executive officer of National Research Corporation, said, “Our first quarter performance was excellent and provides for a very strong start to 2006.”

        Revenues for the quarter ended March 31, 2006, were $9.5 million compared with revenues of $6.6 million for the same period in 2005. Net income for the quarter ended March 31, 2006, was $1.2 million, or $0.18 per basic and diluted share, compared with net income of $748,100, or $0.10 per basic and diluted share, in the prior-year period. Excluding the $0.02 impact per basic and diluted share related to the Company’s adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123R on January 1, 2006, for its share-based compensation plans, earnings per basic and diluted share for the quarter ended March 31, 2006, was $0.20.

        In closing, Patrick E. Beans, chief financial officer of National Research Corporation, added, “The first quarter’s revenue growth, generated across the Company’s various business units, speaks to the viability of the multiple growth runways we have established over the last few years.”

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NRCI Announces First Quarter Results
Page 2
May 2, 2006

        A listen-only simulcast of National Research Corporation’s first quarter 2006 conference call will be available online at www.earnings.com on May 3, 2006, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately an hour later and continue for 30 days.

        National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of ongoing survey-based performance measurement, analysis, tracking and improvement services to the healthcare industry in the United States and Canada. The Company addresses the growing need of healthcare providers and payors to measure the care outcomes, specifically satisfaction and health status, of their patients and/or members. The Company develops tools that enable healthcare organizations to obtain performance measurement information necessary to improve their business practices.

        This press release includes “forward-looking” statements related to the Company that can generally be identified as describing the Company’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect the Company’s future results, please see the Company’s filings with the Securities and Exchange Commission.

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NRCI Announces First Quarter Results
Page 3
May 2, 2006

NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

	Three Months Ended March 31,
	2006			2005
Revenues	$	9,476		$	6,597
Operating expenses:
Direct expenses		4,100			2,750
Selling, general and administrative		3,006			2,185
Depreciation and amortization		470			424
Total operating expenses		7,576			5,359
Operating income		1,900			1,238
Other income (expense):
Interest income		82			109
Interest expense		(10	)		(101	)
Other, net		(14	)		(5	)
Total other income		58			3
Income before income taxes		1,958			1,241
Provision for income taxes		741			493
Net income	$	1,217		$	748
Net income per share, basic	$	0.18		$	0.10
Net income per share, diluted	$	0.18		$	0.10
Weighted average shares outstanding:
Basic		6,819			7,150
Diluted		6,918			7,202

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NRCI Announces First Quarter Results
Page 4
May 2, 2006

NATIONAL RESEARCH CORPORATION
Consolidated Condensed Balance Sheets
(Dollars in thousands)

	March 31, 2006			Dec. 31, 2005
ASSETS	(Unaudited)			(Audited)
Current Assets:
Cash and cash equivalents	$	1,031		$	844
Short-term investments		8,692			9,452
Accounts receivable, net		5,730			5,495
Other current assets		2,417			2,427
Total current assets		17,870			18,218
Net property and equipment		11,860			11,891
Other, net		14,559			14,566
Total Assets	$	44,289		$	44,675
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,246		$	2,007
Deferred revenue		5,630			5,434
Accrued compensation		1,230			1,248
Notes payable		200			1,471
Income taxes payable		208			--
Total current liabilities		8,514			10,160
Non-current liabilities		1,925			1,922
Total Liabilities		10,439			12,082
Shareholders' Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized;
issued 7,786,576 in 2006 and 7,740,571 in 2005;
outstanding 6,891,576 in 2006 and 6,845,571 in 2005		8			8
Additional paid-in capital		20,837			20,046
Retained earnings		23,889			23,360
Unearned compensation		(509	)		(433	)
Accumulated other comprehensive income		313			300
Treasury stock		(10,688	)		(10,688	)
Total shareholders' equity		33,850			32,593
Total Liabilities and Shareholders' Equity	$	44,289		$	44,675

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EX-99.2

Mike:

Thank you ___________, and welcome everyone to National Research Corporation’s first quarter 2006 conference call. My name is Mike Hays, the Company’s CEO, and joining me on the call today is Patrick Beans our CFO.

Before we commence our remarks, I would ask Pat to review conditions related to any forward-looking statements that may be made as part of today’s call. Pat.

Pat:

Thank you, Mike. This conference call includes forward-looking statements related to the Company that involve risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the facts that could affect the company’s future results, please see the company’s filings with the Securities and Exchange Commission. With that, I’ll turn it back to you, Mike.

Mike:

Thank you, Pat.

To kick off the call, let me say we had a great quarter. The performance trends coming out of last year are continuing to build and, in fact, we achieved record levels of performance on most all metrics. Before I review each of the metrics for the first quarter, I’ll turn the call over to Pat for a detailed review of the quarterly financials. After Pat and I conclude our remarks, we will open the call to your questions. Pat.

1

Pat:

Thanks, Mike.

For the three-months ended March 31, 2006, the Company achieved revenue for the quarter of $9.5 million, compared to $6.4 million during the same period in 2004, a 44% increase.

For the three-months ended March 31, 2006, net income for the Company was $1.2 million or $0.18 per share, compared to $750,000 or $0.10 per share for the same period in 2005. The net income margin was 12.8% which was below our model of 15%. Without some abnormal expenses that occurred in the quarter, the Company’s net income margin would have been close to the 15% model. All that to say, I feel comfortable with our 15% net income margin going forward.

As was stated in the press release, excluding the $0.02 impact per basic and diluted share related to the Company’s adoption of the Statement of Financial Accounting Standards (“SFAS”) No. 123R on January 1, 2006, for its share-based compensation plans, earnings per basic and diluted share for the quarter ended March 31, 2006, would have been $0.20 compared to the first quarter 2005 of $0.10.

As just mentioned, one new expense starting the first quarter of 2006 that will be ongoing is the expensing of stock options. We estimate this at $680,000 for the year.

During the first quarter 2006, direct expenses as a percentage of revenue were 43.3%. Our annual goal for direct expenses remains in the range of 43 to 45% of revenue.

2

During the quarter, the selling, general and administrative costs were $3 million or 31.7% of revenue, compared to 23.5% in the fourth quarter 2005. We expect SG&A for the year to be 23 to 25% of revenue in 2006, as we continue to expand our sales and marketing departments.

Depreciation and amortization was 5% of revenue during the first quarter 2006, compared to 6.4% of revenue during the same period in 2005. We expect this expense will increase slightly in dollar amount, but remain at the lower end of our model at 4.5 to 6.0% of revenue in 2006.

During the quarter, other income and expenses remained improved compared to the prior year which was the result of higher interest income and lower interest expense.

Cash flow from operations for the quarter was $1.4 million, compared to $2.4 million for the same period in 2005. Cash and short-term investments as of March 31, 2006, were $9.7 million.

I will now turn the call back over to Mike for additional discussion.

Mike:

Thank you, Pat.

Let’s now turn to a review of our performance against several key metrics. The purpose is to enable you to follow our historical progress and, if you so elect, forecast our progress going forward.

The first metric is Total Recurring Contract Value. This represents the annualized dollar amount of projects that we feel are ongoing in nature or, in other words, our revenue backlog. Total Recurring Contract Value as of March 31, 2006, was $41 million, up 9% from year-end 2005, and up 33% from the first quarter 2005.

3

Net New Sales is the second measure of performance and represents the percentage growth in the value of new contracts signed in the quarter, reduced for any change orders that would decrease a current contract’s value. Net New Sales for the first quarter 2006 reached a record of $3.0 million, double the net new sales achieved of $1.5 million in the first quarter 2005.

The third metric is also sales related representing sales to new clients for our syndicated Healthcare Market Guide product. In the first quarter 2006, the Healthcare Market Guide sales team generated an amazing $881,000 in new sales which almost equaled the total sales in all of 2005 of $897,000.

Combining these two sales metrics for all Measurement, Improvement and Healthcare Market Guide products, the Company’s first quarter net new sales reached $3.8 million compared to our previous high of $2.4 million reached in the third quarter of 2005. While we do not expect record-breaking sales levels each quarter, the sales team is performing very well and market share is clearly shifting to NRC.

Before I open the call to questions, let me highlight our focus for the balance of 2006. First will be completion of the sales expansion plan. Increasing the number of “feet on the street” is working, and completing the three-year plan which commenced during the fourth quarter 2003 is a high priority in our view, especially given the opportunities that have opened up with HCAHPS.

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Second is Leadership Development. Within our organization this past year, it has been and will be going forward, a key area of management focus as we continue to ensure we have in place outstanding leadership for the growth we are experiencing and expect to continue to experience.

And third, we have stepped up product development activities to capitalize on our growing installed base of clients and our new payer platform, that being our recent purchase of GHS. On this latter point, GHS has proven to have been a good move for the Company. Total Recurring Contract Value for the GHS business unit is up 42% from the date of the acquisition.

In summary, we feel good about our ability to take share from competitors, take advantage of the expanding categories in which we work, and build on current client relationships we have in place. We look forward to building upon this base again this year and for years to come.

_____, I would now like to open the Q&A portion of the call.

Closing statement.

5

I’m looking forward to talking to you again next quarter, and thank you again for your time this morning.

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