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 7, 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 November 7, 2017, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended September 30, 2017. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On November 8, 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 September 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 https://edge.media-server.com/m6/p/jfk3domr.

Item 9.01. Financial Statements and Exhibits.

(a)	Not applicable.
(b)	Not applicable.
(c)	Not applicable.
(d)	Exhibits. The exhibits listed in the exhibit index below are being furnished herewith.

EXHIBIT INDEX

(99.1) Press Release of National Research Corporation, dated November 7, 2017.

(99.2) Script for conference call and online Web simulcast, held November 8, 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: November 8, 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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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 2017 RESULTS

LINCOLN, Nebraska (November 7, 2017) — National Research Corporation (NASDAQ: NRCIA and NRCIB) today announced results for the third quarter of 2017.

●   Net New Sales $5.4 million

●   Total Contract Value $123.6 million

●   Revenue up 7% to $29.0 million

●   Net Income of $4.2 million

Revenue for the third quarter ended September 30, 2017, was $29.0 million, compared to
$27.0 million for the same quarter in 2016. Net income for the quarter ended September 30, 2017, was $4.2 million, compared to $4.7 million for the quarter ended September 30, 2016. Diluted earnings per share decreased to $0.09 for Class A shares and $0.57 for Class B shares for the quarter ended September 30 2017, from $0.11 for Class A shares and $0.66 for Class B shares for the quarter ended September 30, 2016.

Regarding third quarter performance, Kevin Karas, chief financial officer of National Research Corporation, said, “Third quarter net new sales increased by 5% over the same period last year as we continued to add new clients and increase contract value with existing clients during the quarter. Our increase in operating income from revenue growth was offset by approximately $975,000 in expenses for our proposed recapitalization.”

A listen-only simulcast of National Research Corporation’s 2017 third quarter conference call will be available online at https://edge.media-server.com/m6/p/jfk3domron November 8, 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 Third Quarter 2017 Results

Page 2

November 7, 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 Third Quarter 2017 Results

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November 7, 2017

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Revenue	$	28,951		$	27,032		$	87,661		$	81,016
Operating expenses:
Direct expenses		12,267			11,468			36,706			33,741
Selling, general and administrative		8,430			7,139			22,021			21,766
Depreciation and amortization		1,132			1,086			3,376			3,146
Total operating expenses		21,829			19,693			62,103			58,653
Operating income		7,122			7,339			25,558			22,363
Other income (expense):
Interest income		29			12			58			34
Interest expense		(18	)		(38	)		(68	)		(158	)
Other, net		40			(4	)		76			112
Total other income (expense)		51			(30	)		66			(12	)
Income before income taxes		7,173			7,309			25,624			22,351
Provision for income taxes		3,020			2,580			9,198			7,558
Net income	$	4,153		$	4,729		$	16,426		$	14,793
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Class A	$	0.10		$	0.11		$	0.39		$	0.35
Class B	$	0.59		$	0.67		$	2.34		$	2.11
Diluted Earnings Per Share:
Class A	$	0.09		$	0.11		$	0.38		$	0.35
Class B	$	0.57		$	0.66		$	2.28		$	2.08
Weighted average shares and share equivalents outstanding
Class A - basic		20,788			20,716			20,759			20,712
Class B - basic		3,514			3,511			3,514			3,503
Class A - diluted		21,740			21,068			21,537			21,017
Class B - diluted		3,620			3,556			3,595			3,557

-END-

NRC Announces Third Quarter 2017 Results

Page 4

November 7, 2017

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

Unaudited Condensed Consolidated Balance Sheets

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

	Sep. 30,			Dec. 31,
	2017			2016
ASSETS
Current Assets:
Cash and cash equivalents	$	35,750		$	33,021
Accounts receivable, net		13,588			10,864
Income taxes receivable		61			14
Other current assets		4,423			3,166
Total Current Assets		53,822			47,065
Property and equipment, net		12,089			11,806
Goodwill		58,036			57,861
Other, net		4,793			3,892
Total Assets	$	128,740		$	120,624
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,757		$	3,916
Deferred revenue		18,486			15,497
Accrued compensation		4,151			4,543
Dividends payable		4,218			4,213
Income taxes payable		1,862			662
Notes payable		1,693			2,683
Total Current Liabilities		34,167			31,514
Non-Current Liabilities		5,729			6,304
Total Liabilities		39,896			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 25,799,230 in 2017 and 25,656,760 in 2016, outstanding 20,942,785 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		50,121			46,725
Retained earnings		75,278			71,507
Accumulated other comprehensive loss		(1,528	)		(2,626	)
Treasury stock		(35,057	)		(32,830	)
Total Shareholders’ Equity		88,844			82,806
Total Liabilities and Shareholders’ Equity	$	128,740		$	120,624

-END- 

EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s 2017 third 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.

I would like to ask Kevin to review with us conditions regarding any forward looking statements that may be made as part of our call today.

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. For our call today Kevin has some prepared remarks regarding our third quarter and year-to-date 2017 performance. After which we will be going directly to any questions you may have – so please feel free to enter the question que as Kevin shares our financial performance highlights.

Kevin.

Kevin:

Thanks, Mike.

Total contract value at the end of the third quarter totaled $123.6 million, representing 7% growth over the same period last year. Healthcare system clients with agreements for multiple solutions represented 21% of our client base at the end of the third quarter 2017, up from 19% at the same time last year. Subscription-based revenue agreements at the end of the third quarter of 2017 represented 93% of the total recurring contract value.

2

Third quarter 2017 revenue was $29.0 million, an increase of 7% over the third quarter of 2016, and was comprised entirely of organic growth from adding new clients and increasing contract value for existing clients.

Consolidated operating income for the third quarter 2017 was $7.1 million or 25% of revenue, compared to $7.3 million, or 27% of revenue for the same period last year.

Total operating expenses increased by 11% to $21.8 million for the third quarter 2017, compared to $19.7 million for the same period last year.

Direct expenses increased 7% to $12.3 million for the third quarter 2017, up from $11.5 million for the same period in 2016. Direct expenses as a percent of revenue was consistent at 42% for the third quarter in both 2017 and 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 additional resources were allocated for client services.

3

Selling, general and administrative expenses increased to $8.4 million for the third quarter 2017, compared to $7.1 million for the same period last year. SG&A expenses in 2017 included $975,000 of expenses associated with the proposed recapitalization. SG&A expenses were 29% of revenue for the third quarter of 2017 compared to 26% of revenue for the same period in 2016.

Depreciation and amortization expenses stayed consistent at $1.1 million for the third quarters in both 2017 and 2016.

The provision for income taxes totaled $3.0 million for the third quarter 2017, compared to $2.6 million for the same period in 2016. The effective tax rate was 42% for the third quarter 2017, compared to 35% for the same period in 2016. The increase in the effective rate was mainly due to $384,000 of additional tax expense from non-deductible expenses associated with the proposed recapitalization.

Net income for the third quarter was $4.2 million in 2017, compared to $4.7 million in 2016. Diluted earnings per share decreased to $0.09 for Class A shares and $0.57 for Class B shares for the quarter ended September 30, 2017, down from $0.11 for Class A shares and $0.66 for Class B shares for the quarter ended September 30, 2016.

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

4

Mike:

Thank you, Kevin.

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.

5