National Research Corporation second-quarter revenue increases to $14.1 million

National Research Corporation (NASDAQ:NRCI) today announced results for the second quarter 2010.

• Quarterly net new contracts up 114% from prior year quarter adding $3.8 million to total contract value;
• Acquisition of Outcome Concept Systems, Inc (OCS) adds $7.4 million to total contract value;
• Illuminate™ launched to capture an estimated $200 million market for discharge planning.

Commenting on the second quarter results, Michael D. Hays, president and chief executive officer of National Research Corporation, said, "I'm delighted that net new contracts for the quarter more than doubled from a year ago, largely driven by an NRC Picker record-breaking sales performance--its second quarter in a row of double-digit growth in net new contracts. Exciting as well is the launch of Illuminate, a discharge planning product which minimizes avoidable hospital readmission for which CMS is broadening financial penalties. This first-to-market, full-scale programmatic solution is already implemented in hospitals covering more than 200,000 patient discharges annually. Today, we also completed the acquisition of OCS, a Seattle-based health analytics and informatics firm. In my view, this transaction brings a whole new opportunity to NRC given OCS's expertise and systems to benchmark financial, clinical and operational performance of healthcare providers."

Revenue for the quarter ended June 30, 2010, was $14.1 million, compared to $13.6 million for the same quarter in 2009. Net income for the quarter ended June 30, 2010, was $1.7 million, or $.25 per basic and diluted share, compared to $1.6 million for the second quarter 2009, or $.24 per basic and diluted share.

Revenue for the first half of 2010 increased 4% to $31.5 million, compared to $30.3 million for the same period in 2009. Net income for the first six months of 2010 increased 12% to $4.8 million, resulting in $0.72 basic and $0.71 diluted earnings per share, also up 13%, over the same period in 2009.

The Company also announced that its Board of Directors has declared a regular quarterly cash dividend of $0.19 (nineteen cents) per share payable September 30, 2010, to shareholders of record as of the close of business on September 3, 2010.

In closing, Patrick E. Beans, chief financial officer of National Research Corporation, said, "Net income for the quarter was lower than we desire at 12% of revenue, but understandable given the Illuminate launch and transaction expenses related to OCS. For the third quarter 2010, we anticipate net income back in the 15% range which aligns with our model. In fact, OCS's software as a service product portfolio, and Illuminate's syndicated-based business model should provide for very attractive margins on that book of business."