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 7, 2015

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 7, 2015, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended March 31, 2015. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On May 8, 2015, 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, 2015. 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 http://edge.media-server.com/m/p/ck9idxkm.

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 7, 2015.
		(99.2)     Script for conference call and online Web simulcast, held May 8, 2015.

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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 8, 2015

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 7, 2015

Exhibit
Number

(99.1)     Press Release of National Research Corporation, dated May 7, 2015.

(99.2)     Script for conference call and online Web simulcast, held May 8, 2015.

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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 2015 RESULTS

__________________________________________

LINCOLN, Nebraska (May 7, 2015) — National Research Corporation (NASDAQ: NRCIA and NRCIB) today announced results for the first quarter of 2015.

● Net New Sales $5.0 million, up 52%

● Total Contract Value $105.8 million

● Revenue up 1% to $26.3 million

● Net Income of $3.5 million, down 36%

Remarking on Company performance, Michael D. Hays, chief executive officer of National Research Corporation said, “The consumer-facing side of healthcare is evolving quickly, resulting in rapid adoption of NRC’s most innovative offerings. Industry leaders such as Intermountain Healthcare, Kaiser Permanente, Cedars-Sinai, Sentra and Cleveland Clinic are setting a new bar for Customer-Centric Healthcare Across the Continuum.”

Revenue for the quarter ended March 31, 2015, was $26.3 million, compared to $26.0 million for the same quarter in 2014. Net income for the quarter ended March 31, 2015, was $3.5 million, compared to $5.5 million for the quarter ended March 31, 2014. Diluted earnings per share decreased to $0.08 for Class A shares and $0.49 for Class B shares for the quarter ended March 31 2015, from diluted earnings per share of $0.13 for Class A shares and $0.77 for Class B shares for the quarter ended March 31, 2014. Combined diluted earnings per share (a non-GAAP measure) decreased to $0.14 for the quarter ended March 31, 2015, from $0.22 for the first quarter of 2014.     

Regarding first quarter performance, Kevin Karas, chief financial officer of National Research Corporation, said, “We continued the trend of positive quarterly net new sales momentum with a 52% increase over prior year. Organic revenue growth from new contracts was offset primarily by a significant reduction in revenue from lower health risk assessment volumes as well as the impact from 2014 contract value reductions, with some shift of revenue into future quarters. Acquisition related expenses and investments to support rapidly growing offerings also increased in the quarter, resulting in a 36% decrease in net income compared to the same period last year.”

NRC Announces First Quarter 2015 Results

Page 2

May 7, 2015

A listen-only simulcast of National Research Corporation’s 2015 first quarter conference call will be available online at http://edge.media-server.com/m/p/ck9idxkm on May 8, 2015, 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 34 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.

The information discussed within this release includes financial results and projections that are in accordance with accounting principles generally accepted in the United States (GAAP). In addition, certain non-GAAP financial measures have been provided that calculate combined earnings per share based on combined Class A and Class B shares and share equivalents outstanding, respectively. The non-GAAP measures should be read in conjunction with the corresponding GAAP measures and should be considered in addition to, and not as an alternative or substitute for, the measures prepared in accordance with GAAP. Please note that the Company’s non-GAAP measures may be different than those used by other companies. The additional non-GAAP financial information the Company presents should be considered in conjunction with, and not as a substitute for, the Company’s financial information presented in accordance with GAAP. The non-GAAP financial measures are provided in an effort to provide information that investors may deem relevant to evaluate results from the company's core business operations and to compare the company's performance with prior periods. The company uses both GAAP and these non-GAAP financial measures for evaluating comparable financial performance against prior periods.

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.

NRC Announces First Quarter 2015 Results

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May 7, 2015

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended March 31,
	2015			2014
Revenue	$	26,270		$	26,030
Operating expenses:
Direct		11,799			10,329
Selling, general and administrative		7,627			6,366
Depreciation and amortization		1,015			935
Total operating expenses		20,441			17,630
Operating income		5,829			8,400
Other income (expense):
Interest income		17			17
Interest expense		(63	)		(81	)
Other, net		(1	)		7
Total other expense		(47	)		(57	)
Income before income taxes		5,782			8,343
Provision for income taxes		2,302			2,890
Net income	$	3,480		$	5,453
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Class A	$	0.08		$	0.13
Class B	$	0.50		$	0.79
Diluted Earnings Per Share:
Class A	$	0.08		$	0.13
Class B	$	0.49		$	0.77
Weighted average shares and share equivalents outstanding
Class A - basic		20,792			20,742
Class B - basic		3,478			3,469
Class A - diluted		21,033			21,134
Class B - diluted		3,524			3,541

NRC Announces First Quarter 2015 Results

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May 7, 2015

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts and par value)

	Mar. 31,				Dec. 31,
	2015				2014
ASSETS
Current Assets:
Cash and cash equivalents	$	37,010		$	40,042
Accounts receivable, net		11,804			8,116
Income taxes receivable		604			1,100
Other current assets		3,753			3,930
Total current assets		53,171			53,188
Property and equipment, net		11,604			12,143
Goodwill		58,280			58,489
Other, net		5,397			5,690
Total Assets	$	128,452		$	129,510
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	5,742		$	6,028
Deferred revenue		15,483			15,095
Accrued compensation		4,023			4,365
Income taxes payable		-			110
Notes payable		2,346			2,328
Total Current Liabilities		27,594			27,926
Non-current liabilities		13,015			13,836
Total Liabilities		40,609			41,762
Shareholders’ Equity:
Preferred stock, $0.01 par value, authorized 2,000,000 shares, none issued		--			--
Class A Common stock, $0.001 par value; authorized 60,000,000 shares, issued 25,538,056 in 2015 and 25,475,662 in 2014, outstanding 20,939,430 in 2015 and 20,894,286 in 2014		25			25
Class B Common stock, $0.001 par value; authorized 80,000,000 shares, issued 4,262,287 in 2015 and 4,251,889 in 2014, outstanding 3,502,644 in 2015 and 3,494,865 in 2014		4			4
Additional paid-in capital		45,370			44,864
Retained earnings		74,649			73,686
Accumulated other comprehensive loss		(1,827	)		(773	)
Treasury stock		(30,378	)		(30,058	)
Total shareholders’ equity		87,843			87,748
Total liabilities and shareholders’ equity	$	128,452		$	129,510

NRC Announces First Quarter 2015 Results

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May 7, 2015

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Non-GAAP Combined Earnings Per Share Schedule

(In thousands, except per share data)

	Three months ended March 31,
	2015		2014
Combined Earnings Per Share
Basic Earnings Per Share	$	0.14	$	0.23
Diluted Earnings Per Share	$	0.14	$	0.22
Combined weighted average shares and share equivalents outstanding
Combined - Basic		24,270		24,211
Combined - Diluted		24,557		24,676

-END- 

EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2015 first quarter conference call. My name is Mike Hays, the Company’s CEO. Joining me on the call today is 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.

1

Mike:

Thank you, Kevin. And again, welcome everyone.

Ending the quarter with having achieved a 25,000-physician milestone for reputation management offerings and surpassing two million Connect outreaches, suggests consumer-centric healthcare is here.

I will return to this theme after Kevin reviews our first quarter financial results.

Kevin

Thank you, Mike.

Net new sales of $5.0 million were added in the first quarter of 2015, which represents an increase of 52% over net new sales for the first quarter of 2014. Total contract value for the first quarter ended at $105.8 million and subscription-based revenue agreements represented 86% of that total contract value.

Revenue for the first quarter 2015 was $26.3 million, an increase of 1% over the first quarter of 2014. Organic revenue growth from net new contracts was offset primarily by a significant reduction in revenue from lower health risk assessment volumes as well as the impact from 2014 contract value reductions.

2

Consolidated operating income for the first quarter of 2015 was $5.8 million or 22% of revenue, compared to $8.4 million or 32% of revenue for the same period last year.

Total operating expenses for the first quarter increased from $17.6 million in 2014 to $20.4 million in 2015.

Direct expenses increased to $11.8 million for the first quarter 2015, compared to $10.3 million for the same period in 2015. In addition to increased survey volume and conference costs, incremental direct expenses totaling $564,000 were incurred in the first quarter related to the Digital Assent acquisition. Direct expenses as a percent of revenue were 45% for the first quarter of 2015 compared to 40% of revenue in 2014. For the full year of 2015, direct expenses are expected to average 43% of revenue.

Selling, general and administrative expenses increased to $7.6 million, or 29% of revenue, for the first quarter 2015, compared to $6.4 million or 24% of revenue for the same period in 2014. A $657,000 expense was recorded in the first quarter as a result of our decision not to exercise a purchase option that was executed in 2014 for a potential acquisition. Incremental SG&A expenses totaling $397,000 were also incurred in the first quarter related to the Digital Assent acquisition. Consolidated SG&A expense is expected to average in the 25 to 26% of revenue range for the full year of 2015.

3

Depreciation and amortization expense for the first quarter 2015 was $1,015,000, compared to $935,000 for the first quarter of 2014. Depreciation and amortization expense was 4% of revenue for the first quarter 2015 and is expected to continue at 4% of revenue for the full year 2015.

The provision for income taxes totaled $2.3 million for the first quarter 2015, compared to $2.9 million for the same period in 2014. The effective tax rate was 39.8% for the first quarter of 2015, compared to 34.6% for the first quarter of 2014. The effective tax rate for the first quarter of 2015 increased from the recording of a capital valuation allowance due to impairment on a purchase option as previously mentioned. The effective tax rate is expected to average 36% for the full year 2015.

Net income for the first quarter 2015 decreased to $3.5 million from $5.5 million in 2014. For the first quarter 2015, combined non-GAAP diluted earnings per share were $0.14, compared to $0.22 for the first quarter of 2014.

4

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

Mike:

Thank you, Kevin.

For organizations like ours that have championed the consumer-centric healthcare movement, it is rewarding that the world has now clearly changed. The CEO of a prestigious clinic, reflecting on how they listen to the customer, said, “I am sure that our current setup will not continue to work for our patients and probably not for us.”

For the leading healthcare organizations, capturing the voice of the customer in a more relevant and timely manner is viewed as a competitive advantage. And when such feedback is used to celebrate highly regarded physicians, the organization, care providers and the now-informed consumer win.

5

In today’s world, customers’ digital interactions shape brand preferences and represent the vast majority of information gathering for informed decision making. Yet today, the traditional methods of informing patients and providing quality transparency are not working.

Case in point: Ten years ago, the first public report of the patients’ experience was taking shape. For all of the efforts benefits, which are many, only 5% of households have accessed the data and patient satisfaction has only improved 4%. It has been estimated that over $300 million is spent annually to fuel this national scorecard of hospital patient experience.

Redeploying this spend against contemporary enterprise-wide feedback systems like Connect, as are a growing number of NRC clients, provides relevant and timely information. Added use cases to this feedback, such as NRC transparency solutions, is proving to be a winning combination. Leading organizations setting the new standard for a more informed and empowered customer include Intermountain Healthcare, Cedars-Sinai and Cleveland Clinic.

Sentra, a very progressive organization, is a classic example of an organization that shifted traditional patient experience spend to Connect and has benefited from close to real time feedback from 75,000 customers in 90 days. Five times more feedback for the same budget. This level of connectivity to the voice of customers is unmatched in healthcare. In total, 2.4 million customers have been touched by Connect, the most innovative feedback platform in the industry

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Of course, the real play is much broader than our Connect and transparency solutions, and far more important than only converting traditional spend. The consumer represents the most powerful force in healthcare over the next decade and empowering the customer and their care providers with relevant and timely knowledge improves choice and outcomes at less cost

_______________, 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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