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): August 1, 2017

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company □

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

Item 2.02. Results of Operations and Financial Condition.

On August 1, 2017, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended June 30, 2017. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On August 2, 2017, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the quarter ended June 30, 2017. 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/v7vdqgk8.

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 August 1, 2017.
(99.2)	Script for conference call and online Web simulcast, held August 2, 2017.

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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: August 2, 2017
	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 August 1, 2017

Exhibit
Number

(99.1)     Press Release of National Research Corporation, dated August 1, 2017.

(99.2)     Script for conference call and online Web simulcast, held August 2, 2017.

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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

SECOND QUARTER 2017 RESULTS

LINCOLN, Nebraska (August 1, 2017) — National Research Corporation (NASDAQ: NRCIA and NRCIB) today announced results for the second quarter of 2017.

● Net New Sales $5.6 million

● Total Contract Value $121.7 million

● Revenue up 9% to $28.4 million

● Net Income of $5.8 million, up 26%

Revenue for the second quarter ended June 30, 2017, was $28.4 million, compared to $26.1 million for the same quarter in 2016. Net income for the quarter ended June 30, 2017, was $5.8 million, compared to $4.6 million for the quarter ended June 30, 2016. Diluted earnings per share increased to $0.13 for Class A shares and $0.80 for Class B shares for the quarter ended June 30 2017, from $0.11 for Class A shares and $0.64 for Class B shares for the quarter ended June 30, 2016.

Regarding second quarter performance, Kevin Karas, chief financial officer of National Research Corporation, said, “We continued to see positive growth in revenue and operating income in the second quarter, bringing our 2017 year-to-date revenue growth rate to 9% and operating income growth rate to 23%, compared to the first half of 2016.”

A listen-only simulcast of National Research Corporation’s 2017 second quarter conference call will be available online at http://edge.media-server.com/m/p/v7vdqgk8on August 2, 2017, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately one hour later and continue for 30 days.

NRC Announces Second Quarter 2017 Results

Page 2

August 1, 2017

For more than 36 years, National Research Corporation has been a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations in the United States and Canada. The Company’s solutions enable its clients to understand the voice of the customer with greater clarity, immediacy and depth.

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.

-END-

NRC Announces Second Quarter 2017 Results

Page 3

August 1, 2017

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Revenue	$	28,435		$	26,114		$	58,710		$	53,984
Operating expenses:
Direct expenses		11,939			10,734			24,439			22,273
Selling, general and administrative		6,905			7,270			13,591			14,627
Depreciation and amortization		1,139			1,092			2,244			2,060
Total operating expenses		19,983			19,096			40,274			38,960
Operating income		8,452			7,018			18,436			15,024
Other income (expense):
Interest income		15			11			29			22
Interest expense		(23	)		(36	)		(50	)		(121	)
Other, net		27			43			35			118
Total other income (expense)		19			18			14			19
Income before income taxes		8,471			7,036			18,450			15,043
Provision for income taxes		2,719			2,478			6,178			4,978
Net income	$	5,752		$	4,558		$	12,272		$	10,065
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Class A	$	0.14		$	0.11		$	0.29		$	0.24
Class B	$	0.82		$	0.65		$	1.75		$	1.44
Diluted Earnings Per Share:
Class A	$	0.13		$	0.11		$	0.28		$	0.24
Class B	$	0.80		$	0.64		$	1.71		$	1.41
Weighted average shares and share equivalents outstanding
Class A - basic		20,752			20,711			20,745			20,711
Class B - basic		3,514			3,508			3,514			3,498
Class A - diluted		21,525			20,992			21,404			21,002
Class B - diluted		3,591			3,565			3,584			3,557

-END-

NRC Announces Second Quarter 2017 Results

Page 4

August 1, 2017

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

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

	Jun. 30,			Dec. 31,
	2017			2016
ASSETS
Current Assets:
Cash and cash equivalents	$	31,628		$	33,021
Accounts receivable, net		13,138			10,864
Income taxes receivable		1,172			14
Other current assets		5,045			3,166
Total Current Assets		50,983			47,065
Property and equipment, net		12,138			11,806
Goodwill		57,942			57,861
Other, net		3,513			3,892
Total Assets	$	124,576		$	120,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,715		$	3,916
Deferred revenue		16,735			15,497
Accrued compensation		4,076			4,543
Dividends payable		4,218			4,213
Income taxes payable		--			662
Notes payable		2,107			2,683
Total Current Liabilities		30,851			31,514
Non-Current Liabilities		5,895			6,304
Total Liabilities		36,746			37,818
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 25,796,457 in 2017 and 25,656,760 in 2016, outstanding 20,940,790 in 2017 and 20,891,069 in 2016		26			26
Class B Common stock, $0.001 par value; authorized 80,000,000 shares, issued 4,317,656 in 2017 and 4,308,875 in 2016, outstanding 3,540,244 in 2017 and 3,539,931 in 2016		4			4
Additional paid-in capital		49,620			46,725
Retained earnings		75,343			71,507
Accumulated other comprehensive loss		(2,127	)		(2,626	)
Treasury stock		(35,036	)		(32,830	)
Total Shareholders’ Equity		87,830			82,806
Total Liabilities and Shareholders’ Equity	$	124,576		$	120,624

-END-

EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2017 second quarter earnings call. My name is Mike Hays, the Company’s CEO. Joining me on the call today is Kevin Karas, our Chief Financial Officer.

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.

Mike.

Mike:

Thanks, and again, welcome everyone. I’m going to turn the call right back to Kevin to jump in to a review of our second quarter and year-to-date 2017 performance.

Kevin.

Kevin:

Thanks, Mike.

Total contract value at the end of the second quarter totaled $121.7 million, representing 7% growth over the same period last year. Healthcare system clients with agreements for multiple solutions represented 20% of our client base at the end of the second quarter 2017, up from 18% at the same time last year. Subscription-based revenue agreements at the end of the second quarter of 2017 represented 91% of the total recurring contract value.

Second quarter 2017 revenue was $28.4 million, an increase of 9% over the second quarter of 2016, with the increase being comprised entirely of organic growth from adding new clients and increasing contract value for existing clients.

2

Consolidated operating income for the second quarter 2017 was $8.5 million or 30% of revenue, compared to $7.0 million, or 27% of revenue for the same period last year.

Total operating expenses increased by 5% to $20.0 million for the second quarter 2017, compared to $19.1 million for the same period last year.

Direct expenses increased 11% to $11.9 million for the second quarter 2017, up from $10.7 million for the same period last year. Direct expenses as a percent of revenue increased to 42% for the second quarter in 2017 compared to 41% in 2016. Our variable direct expenses as a percent of revenue decreased compared to last year as incremental variable cost of product expenses from revenue growth in the quarter were offset by decreased expenses from changes in data collection methodologies. At the same time, our fixed direct expenses increased as we added additional resources for client services.

Selling, general and administrative expenses decreased to $6.9 million for the second quarter 2017, compared to $7.3 million for the same period last year. The decrease in SG&A expenses is primarily due to lower salary and benefit costs, including lower share-based compensation expense. SG&A expenses were 24% of revenue for the second quarter of 2017 compared to 28% of revenue for the same period in 2016.

3

Depreciation and amortization expenses stayed consistent at $1.1 million for both second quarters of 2017 and 2016.

The provision for income taxes totaled $2.7 million for the second quarter 2017, compared to $2.5 million for the same period last year. The effective tax rate was 32.1% for the second quarter 2017, compared to 35.2% for the same period in 2016. The decrease in our effective rate was mainly due to higher tax benefits in 2017 from the exercise of options and the tax benefit of dividends paid to non-vested shareholders.

Net income for the second quarter was $5.8 million in 2017, compared to $4.6 million in 2016. Our diluted earnings per share increased to $0.13 for Class A shares and $0.80 for Class B shares for the quarter ended June 30, 2017, up from $0.11 for Class A shares and $0.64 for Class B shares for the same quarter last year.

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

4

Mike:

Thank you, Kevin, for your review of our performance.

This completes our prepared remarks so I will now ask _______________, 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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