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):                              November 6, 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 November 6, 2012, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended September 30, 2012.  A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On November 7, 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 September 30, 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 November 6, 2012.

(99.2) Script for conference call and online Web simulcast, held November 7, 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:  November 7, 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 November 6, 2012

Exhibit

Number

(99.1)           Press Release of National Research Corporation, dated November 6, 2012.

(99.2)           Script for conference call and online Web simulcast, held November 7, 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

THIRD QUARTER 2012 RESULTS

Organic Growth Drives Solid Top Line and Bottom Line Performance

LINCOLN, Nebraska (November 6, 2012) — National Research Corporation (NASDAQ:NRCI) today announced results for the third quarter 2012.

· Net new sales of $4.7 million

· Revenue up 15% to $21.4 million

· Operating income of $5.6 million, up 35%

· Net income up 35% to $3.6 million

· Diluted earnings per share of $0.51, up 31%

Commenting on the company’s quarterly performance, Michael D. Hays, chief executive officer of National Research Corporation, said, “I’m pleased to report that expanded relationships with current clients, equally matched by signing new clients in the third quarter, continues the all-organic top-line growth trend we have been experiencing from the beginning of the year.”

Revenue for the quarter ended September 30, 2012, was $21.4 million, compared to $18.5 million for the same quarter in 2011.  Net income for the quarter ended September 30, 2012, was $3.6 million, or $0.53 per basic share and $0.51 per diluted share, compared to $2.6 million for the second quarter 2011, or $0.40 per basic share and $0.39 per diluted share.

Kevin Karas, chief financial officer of National Research Corporation, said, “Thirty-five percent growth in net income on 15% revenue growth in the quarter, clearly illustrates the attractiveness of the company’s business model.  Our total contract value, which was $91.7 million as of September 30, 2012, continues to build and additional opportunities for leverage are being realized.”

NRCI Announces Third Quarter 2012 Results

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November 6, 2012

In closing, the company’s Board of Directors announced it has declared a regular quarterly dividend of twenty-six cents ($0.26) per share and a special one-time dividend of one dollar and fifty cents ($1.50) per share both payable Tuesday, December 18, 2012, to shareholders of record as of the close of business on Friday, November 16, 2012.

A listen-only simulcast of National Research Corporation’s 2012 third quarter conference call will be available online at www.earnings.com on November 7, 2012, beginning at 11:00 a.m. Eastern time.  The online replay will follow approximately one hour later and continue for 30 days.

For more than 31 years, National Research Corporation has been at the forefront of patient-centered care, helping healthcare providers measure and improve quality and services through analytics that offer a rich understanding of customers’ experiences, preferences, risks and behaviors across the healthcare continuum.

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 Third Quarter 2012 Results

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November 6, 2012

NATIONAL RESEARCH CORPORATION

Unaudited Condensed Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenue	$	21,386		$	18,549		$	64,425		$	56,655
Operating expenses:
Direct	$	8,769			7,471			26,333			21,489
Selling, general and administrative		5,821			5,572			17,541			17,651
Depreciation and amortization		1,149			1,312			3,606			3,790
Total operating expenses		15,739			14,355			47,480			42,930
Operating income		5,647			4,194			16,945			13,725
Other income (expense), net:
Interest income		8			4			20			8
Interest expense		(134	)		(155	)		(416	)		(480	)
Other, net		(29	)		74			(16	)		55
Total other expense, net		(155	)		(77	)		(412	)		(417	)
Income before income taxes		5,492			4,117			16,533			13,308
Provision for income taxes		1,915			1,470			5,168			4,876
Net income	$	3,577		$	2,647		$	11,365		$	8,432
Net income per share, basic	$	0.53		$	0.40		$	1.68		$	1.26
Net income per share, diluted	$	0.51		$	0.39		$	1.64		$	1.23
Weighted average shares outstanding:
Basic		6,791			6,679			6,754			6,666
Diluted		6,961			6,850			6,941			6,845

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NRCI Announces Third Quarter 2012 Results

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November 6, 2012

NATIONAL RESEARCH CORPORATION

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands)

	Sep. 30, 2012			Dec. 31, 2011
ASSETS
Current Assets:
Cash and cash equivalents	$	15,026		$	8,082
Accounts receivable, net		14,206			11,187
Income taxes receivable		90			--
Other current assets		3,129			2,868
Total current assets		32,451			22,137
Net property and equipment		12,907			13,613
Goodwill		57,839			57,730
Other, net		6,232			7,196
Total Assets	$	109,429		$	100,676
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,305		$	2,302
Deferred revenue		17,527			16,500
Accrued compensation		3,779			3,591
Income taxes payable		--			145
Notes payable		13,076			1,861
Total current liabilities		37,687			24,399
Non-current liabilities		7,673			20,723
Total Liabilities		45,360			45,122
Shareholders’ Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized; issued 8,278,491in 2012 and 8,117,849 in 2011; outstanding 6,824,355in 2012 and 6,724,280 in 2011		8			8
Additional paid-in capital		35,880			31,080
Retained earnings		53,061			46,995
Accumulated other comprehensive income		1,267			907
Treasury stock		(26,147	)		(23,436	)
Total shareholders’ equity		64,069			55,554
Total liabilities and shareholders’ equity	$	109,429		$	100,676

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EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2012 third quarter conference call.  My name is Mike Hays, the Company’s CEO.  Joining me on the call today is 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 reported last evening, the Company had a great quarter which adds yet another data point to what has been a very long and positive trend.  I would like to take this moment and thank every one of the hundreds of NRC associates who not only contributed to a great quarter, but also, and more importantly, help client organizations every day provide a better experience to millions of patients.  Nothing great ever happens to any organization without great associates.  I would like to thank each and every one of you!

With that, let me have Kevin review our third quarter financial performance.

Kevin

Thank you, Mike.

Revenue for the third quarter was $21.6 million, an increase of 15% over the third 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 from cross-selling and increasing contract value in our existing client base.

2

Net new sales of $4.7 million were added in the third quarter, resulting in total contract value of $91.7 million as of September 30, 2012.  As a result of our focus over the past several years of establishing renewable, recurring service arrangements with our clients, we continue to see that over 98% of our total contract value is comprised of annual recurring revenue agreements.

We also ended the quarter with subscription-based agreements representing 78% of contract value, compared to 70% of contract value at the end of the third quarter of 2011.  Subscription agreements generated 78% of total revenue for the third quarter 2012 and 74% of total revenue in 2012 on a year-to-date basis.

Total operating expenses for the third quarter increased by 9.6% from $14.4 million in 2011 to $15.7 million in 2012.

3

Direct expenses increased to $8.8 million for the third quarter 2012, compared to $7.5 million for the same period in 2011.  This is the result of increased variable costs related to revenue growth, as well as additional investments in technology, research and service resources that support our strategy of empowering customer-centric healthcare across the continuum.  Direct expenses as a percent of revenue are expected to be at an average of 41% for the full year 2012.

Selling, general and administrative expenses increased 4% to $5.8 million for the three-month period ended September 30, 2012, compared to $5.6 million for the same period in 2011.  SG&A expenses decreased as a percent of revenue to 27% for the three-month period ended September 30, 2012, from 30% for the same period in 2011 due to the leveraging of SG&A expenses against increased revenue.  SG&A expenses as a percent of revenue are expected to be at an average of 27% for the full year 2012.

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

4

The provision for income taxes totaled $1.9 million for the three-month period ended September 30, 2012, compared to $1.5 million for the same period in 2011.  The effective tax rate of 34.9% for the three-month period ended September 30, 2012, is lower than the 35.7% rate in the same period of 2011 primarily the result of additional tax benefits due to the expiration of the federal statute of limitations associated with certain tax provisions.  The effective tax rate for the remainder of 2012 is expected to average 36%.

Net income for the third quarter of 2012 increased by 35% to $3.6 million, compared to $2.6 million in 2011.  Diluted earnings per share for the third quarter increased by 33% to $0.51, compared to $0.39 for the same period last year.

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

Mike:

Thank you, Kevin.

As Kevin pointed out, organic growth driven by cross-selling the Company’s broad product portfolio into our current installed base of 12,000 healthcare providers and 100 payer clients and winning major new clients throughout the year of 2012, has resulted in increasing growth this quarter.

5

From both current and new clients, we continue to hear NRC’s products and services are delivering high value by enabling them to capture market share, retain customers, and engage patients which reduces costs and improves outcomes.

In addition, the market’s appetite for our products is expanding rapidly as the industry addresses the new normal of today’s requirements of value-based purchasing and reducing readmissions.  These market dynamics suggest an interesting growth trajectory for the Company over the next several years.

However, even more robust growth for our industry and, consequently NRC, is starting to build as organizations are taking on more risk and becoming the owners of their customers’ health.

An ever-increasing number of healthcare providers will own the healthcare risk of an ever-increasing segment of their marketplace and the ability to thrive in this new risk-baring environment will determine all providers’ viability.  Many will not make it, while others will expand, more so than in any time in history.

6

Among the most mission-critical requirements will be understanding patients’ preferences and managing all care transitions.  However, even among the most integrated systems, yet alone today’s single-silo providers, care transition failures between service settings, including the transition to home, are everyday occurrences.  Engaging patients and understanding preferences is missing in the world of healthcare, even among the best of the best.

We plan to change that by providing client organizations with a robust lifetime profile of every customer.  A profile including self-reported outcomes, patient experience related to care delivery, and activities of daily living will bring visibility regarding customers’ preferences to providers never before possible.  As our clients take on more risk and seek to capture value-based purchasing dollars and avoid readmission penalties, they can never know too much about the customer.

_______________, 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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