Note

– Equity

Method Investment in Caris HealthCare, L.P.

As of

December

31,

2016,

we have a

75.1%

non–controlling ownership interest in Caris, a business that specializes in hospice care services in NHC owned health care centers and in other settings. The carrying value of our investment is

$34,717,000

and

$35,771,000

December

31,

2016

and

2015,

respectively. The carrying amounts are included in investments in limited liability companies in the consolidated balance sheets. The difference between the carrying value of our investment and our capital account balance in Caris is due to the additional limited partner ownership interest the Company acquired from current and former partners. Summarized financial information of Caris for the years ended

December

31,

2016,

2015,

and

2014

is provided below.

	December 31,
	2016		2015		2014
	( in thousands)
Current assets	$	21,973	$	23,213	$	20,922
Noncurrent assets		10,896		11,091		11,540
Liabilities		8,082		7,970		7,305
Partners’ capital		24,787		26,334		25,157
Revenue		52,105		50,464		51,441
Expenses		42,928		40,875		40,908
Net income		9,177		9,589		10,533

Consolidation Consideration

Due to our ownership percentage in Caris, we have considered whether Caris should be consolidated by NHC under the guidance provided in ASC Topic

810,

Consolidation

. We do not consolidate Caris because

(1)

Caris’ equity at risk is sufficient to finance its activities without additional subordinated financial support,

(2)

the general partner of the Partnership has the power to direct the activities that most significantly impact the economic performance of Caris, and

(3)

the equity holders of Caris possess the characteristics of a controlling financial interest, including voting rights that are proportional to their economic interests. Supporting the assertions above is the following:

(1)

the ownership percentage of the general partner remains equally divided between NHC and another party,

(2)

the general partner manages and controls the Partnership with full and complete discretion, and

(3)

the limited partners have no right or power to take part in the control of the business of the Partnership, which is where our ownership percentage increases have occurred.