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 1, 2012

National Research Corporation

(Exact name of registrant as specified in its charter)

Wisconsin	0-29466	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, 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 1, 2012, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended March 31, 2012.  A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On May 2, 2012, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the quarter ended March 31, 2012.  A copy of the script for such conference call and simulcast is furnished as Exhibit 99.2 and is incorporated by reference herein.  An archive of such conference call and simulcast 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 1, 2012.

(99.2) Script for conference call and online Web simulcast, held May 2, 2012.

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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 2, 2012

NATIONAL RESEARCH CORPORATION
By:	/s/ Kevin R. Karas
	Kevin R. Karas Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary

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NATIONAL RESEARCH CORPORATION

Exhibit Index to Current Report on Form 8-K

Dated May 1, 2012

Exhibit

Number

(99.1)           Press Release of National Research Corporation, dated May 1, 2012.

(99.2)           Script for conference call and online Web simulcast, held May 2, 2012.

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EX-99.1

Exhibit 99.1

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

Contact:   Kevin R. Karas Chief Financial Officer 402-475-2525

NATIONAL RESEARCH CORPORATION ANNOUNCES

FIRST QUARTER 2012 RESULTS

______________________________________________

Company Significantly Expands Strategic Focus:

Empowering Customer-Centric Healthcare Across the Continuum™

LINCOLN, Nebraska (May 1, 2012) — National Research Corporation (NASDAQ:NRCI) today announced results for the first quarter 2012.

● Net new sales of $4.0 million

● Revenue up 13% to $22.4 million

● Net income up 11% to $3.8 million

● Diluted earnings per share of $0.56, up 10%

Announcing a much expanded product focus, Michael D. Hays, chief executive officer of National Research Corporation, said, “Currently our products provide value by understanding patients in the context of them receiving care.  Going forward, this value will be greatly enhanced by providing robust profiles of these individuals and their families outside of the four walls of care delivery.  As providers take on more risk, an everyday understanding of the customers’ preferences, behaviors and health risks will become critical.”

Revenue for the quarter ended March 31, 2012, was $22.4 million, compared to $19.8 million for the same quarter in 2011.  Net income for the quarter ended March 31, 2012, was $3.8 million, or $0.57 per basic share and $0.56 per diluted share, compared to $3.5 million for the first quarter 2011, or $0.52 per basic share and $0.51 per diluted share.

In closing, Kevin Karas, chief financial officer of National Research Corporation, said, “A timing difference in 2011, which shifted direct expenses from the first quarter into the second quarter, negatively impacted our first quarter 2012 operating income margin and growth rate on a comparable basis.  Going forward, we expect our 2012 operating income growth rate to exceed 20% on a year-to-date basis by the end of the second quarter.”

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NRCI Announces First Quarter 2012 Results

Page 2

May 1, 2012

A listen-only simulcast of National Research Corporation’s 2012 first quarter conference call will be available online at www.earnings.com on May 2, 2012, beginning at 11:00 a.m. Eastern time.  The online replay will follow approximately one hour later and continue for 30 days.

National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of performance measurement, improvement services, and governance education to the healthcare industry in the United States and Canada.

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 2012 Results

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May 1, 2012

NATIONAL RESEARCH CORPORATION

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended March 31,
	2012			2011
Revenue	$	22,407		$	19,791
Operating expenses:
Direct expenses		8,931			6,758
Selling, general and administrative		6,151			6,090
Depreciation and amortization		1,243			1,243
Total operating expenses		16,325			14,091
Operating income		6,082			5,700
Other income (expense), net:
Interest income		5			2
Interest expense		(142	)		(169	)
Other, net		(15	)		(29	)
Total other expense, net		(152	)		(196	)
Income before income taxes		5,930			5,504
Provision for income taxes		2,081			2,048
Net income	$	3,849		$	3,456
Net income per share, basic	$	0.57		$	0.52
Net income per share, diluted	$	0.56		$	0.51
Weighted average shares outstanding:
Basic		6,719			6,654
Diluted		6,907			6,809

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NRCI Announces First Quarter 2012 Results

Page 4

May 1, 2012

NATIONAL RESEARCH CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands)

	Mar. 31,			Dec. 31,
	2012			2011
ASSETS
Current Assets:
Cash and cash equivalents	$	7,872		$	8,082
Accounts receivable, net		13,577			11,187
Other current assets		3,810			2,868
Total current assets		25,259			22,137
Net property and equipment		13,511			13,613
Goodwill		57,798			57,730
Other, net		6,810			7,196
Total Assets	$	103,378		$	100,676
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,909		$	2,302
Deferred revenue		16,361			16,500
Accrued compensation		2,922			3,591
Income taxes payable		153			145
Notes payable		2,072			1,861
Total current liabilities		24,417			24,399
Non-current liabilities		20,554			20,723
Total Liabilities		44,971			45,122
Shareholders’ Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized; issued 8,214,111 in 2012 and 8,117,849 in 2011; outstanding 6,778,288 in 2012 and 6,724,280 in 2011		8			8
Additional paid-in capital		33,414			31,080
Retained earnings		49,082			46,995
Accumulated other comprehensive income		1,117			907
Treasury stock		(25,214	)		(23,436	)
Total shareholders’ equity		58,407			55,554
Total liabilities and shareholders’ equity	$	103,378		$	100,676

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EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2012 first quarter conference call.  My name is Mike Hays, the Company’s CEO.  Joining me on the call today are Susan Henricks, President and Chief Operating Officer, and Kevin Karas, our Chief Financial Officer.

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

Kevin :

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, Kevin.  And again, welcome everyone.

As we touched upon during our last earnings call, the statement “Empowering customer-centric healthcare across the continuum” sets forth a vastly expanded strategy for NRC.  I’m excited to continue that discussion with you today and highlight what that means for the company.

Before we dive into that strategic topic, let me have Kevin review our first quarter financial performance.

Kevin

Thank you, Mike.

Revenue for the first quarter was $22.4 million, an increase of 13% over the first quarter of 2011.  Revenue growth for the quarter is comprised entirely from organic growth, which was driven by a combination of continued gains in market share and vertical growth in our existing client base.

2

Contract value at the end of the first quarter 2012 increased by 11% over the first quarter 2011, resulting in total contract value of $85.2 million as of March 31, 2012.  As a result of our focus over the past several years of establishing renewable, recurring service arrangements with our clients, over 98% of our current total contract value is comprised of annual recurring revenue agreements.

We also ended the quarter with subscription-based agreements representing 75% of contract value, compared to 57% of contract value at the end of the first quarter of 2011.  Subscription agreements generated 68% of the total revenue for the first quarter 2012, compared to 49% of total revenue in the first quarter of 2011.  Based on our first quarter results, we continue to project organic revenue growth for the full year 2012 in the 15-20% range.

Direct expenses increased to $8.9 million for the first quarter 2012, compared to $6.8 million for the same period in 2011.  The increase is the result of increased variable costs related to revenue growth, as well as a change in timing of expenses which increased first quarter direct expenses on a comparable basis to 2011.  Direct expenses also increased from additional investments in technology, research and service resources that support our strategy of empowering customer-centric healthcare across the continuum.  As a result, direct expenses as a percent of revenue are expected to be at an average of 39-40% for the full year 2012, representing an increase of 1-2% compared to 2011.

3

Offsetting this increase, SG&A expenses as a percent of revenue are expected to decrease from 2011 to an average of 28-29% for the full year 2012.

SG&A expenses in the first quarter of 2012 were 27% of revenue, compared to 31% of revenue in first quarter 2011.  This decrease is due to the Wausau location closing costs incurred in 2011, as well as increased leverage of general and administrative expenses in the first quarter of 2012.  At the same time, we continued to invest in business development resources, building our sales force to 71 associates at the end of the first quarter.

Depreciation and amortization expense remained consistent at $1.2 million for the first quarters of both 2012 and 2011.  Depreciation and amortization expense is expected to remain in the 6% of revenue range for the full year of 2012.

4

First quarter income tax expense increased from $2.0 million in 2011, to $2.1 million in 2012.  The effective tax rate for the three months ended March 31, 2012, is lower than the same period in 2011, primarily due to the recording of federal tax credits of $111,000, as well as a reduction in Canadian statutory annualized tax rates.

Net income for the first quarter of 2012 increased by 11% to $3.8 million compared to $3.5 million in 2011.  Diluted earnings per share for the first quarter increased by 10% to $0.56, compared to $0.51 for the same period last year.

With that I’ll turn the call back to Mike.

Mike:

Thank you, Kevin.

Thinking now about where the company is headed, let’s start with where we are.

5

As you are well aware, we know patients and what is most important to them regarding their care experience.  Our heritage is all about patient-centered care; in fact, we coined the word.  Today, however, a deeper understanding of the patient is critical and we are addressing that need by evolving our strategy.  At its core, our expanded strategy is all about understanding patients as customers, meaning when they are outside of the physical service setting in which they receive care.  This rich understanding of the healthcare customer in their everyday life, including health risks, preferences and behaviors, is now among the required perspectives for our clients given the new realities of healthcare reimbursement.

The other aspect of this strategy is the fact our expanded offerings will provide insights across the entire healthcare continuum providing our clients an integrated view of their customers as they transition in and out and between the multiple service settings typically required, even for a single episode of care.  As well, a cumulative profile of the customer over time will provide insights, never before available, across multiple episodes of care for an individual.

In a nutshell, customer-centric healthcare across the continuum is a longitudinal lifetime profile of the customer; a profile ever-expanding and robust, reflective not only of the individual while receiving care in any care setting, but also the person’s interaction with the broader definition of health in their everyday life.

6

So the big question is, “Why are healthcare providers scrambling to gain greater understanding of their customers?”

For most of us, the actual time spent in a traditional care setting, whether it be a doctor’s office, emergency room, outpatient, hospital, or home care, represents far less than 1% of one’s life.  However, the balance, or 99%, of one’s time is not void of health-related interactions, decisions and behaviors.

In fact “health” is a daily reality for all of us and, more often than not, our activities of daily living dictate what healthcare services we consume and our decision-making process as to which provider we select.

Under the new reimbursement models, providers will increasingly be at risk for the health of their customers, which completely shifts the healthcare revenue model from volume to value.  Keeping customers out of the hospital and, when and if care is needed, ensuring that they decide on the least costly care setting with the best outcome will be the name of the game.

Given this dramatic shift in reimbursement, it will simply become impossible for any provider to manage the risk or influence decisions if all they know about their customers is limited to less than 1% of the time that person is a “patient”.

7

The importance of the customer is not new to any other industry, except healthcare.  Most organizations have benefited from a complete and robust understanding of their customer for decades.  As this need is embraced by the healthcare industry, the resulting information spend will be enormous.  Just take Consumer Package Goods, for example, which spends over $5 billion annually on understanding the customer and is a far smaller industry segment than is healthcare.

This customer-centric information space is just emerging in healthcare, however, signs suggest a rapid adoption.  In addition to reimbursement, another driver of rapid adoption is the sheer volume of publicly available information, not the least of which is performance information that, for the first time, quantifies the reality that not every provider is high quality.  It has come as a surprise to most consumers that their decision as to which provider they select, will determine the quality of their care outcome.

This available performance information has intersected with the increasing portion of the cost of care being paid directly by the customer.  And, as anyone can predict, an informed customer results in a far more engaged customer when it comes to spending their own money.  The customer is now the decision-maker for the largest sector of the economy, a powerful role that providers have never had to deal with to the degree they must today.

8

I believe the company is well-positioned to capitalize on the movement.

We have, over the past few years, expanded our market presence beyond the hospital to across the provider continuum and today, through acquisition and organic growth, we hold dominant market share in the important post-acute care service settings of short stay, home care, skilled-nursing and hospice.

Today, we serve over 15,000 client organizations to which we have ready access to propose this vastly expanded offering.

And, most important, we have the credentials to own this space.  Our Picker Institute heritage is all about understanding the most important aspects of the patient experience.  Following that patient home and tracking their health risks, behaviors and preferences is a natural extension of our core competencies.

9

In closing, the space we are defining and taking ownership of is clearly in our sweet spot, is very large and contains many opportunities to monetize.  I look forward to updating you on this journey on each of our upcoming earnings calls.

_______________, I would now like to open the call to questions.

Closing Statement – Mike:

Thank you for your time today.   We look forward to reporting our progress next quarter.

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