Note 17 - Equity Method Investment in Caris HealthCare, L.P.

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Cost and Equity Method Investments Disclosure [Text Block]

Note 17 – Equity Method Investment in Caris HealthCare, L.P.

As of December 31, 2019, 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 $36,673,000 and $30,625,000 at December 31, 2019 and 2018, 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, 2019, 2018, and 2017 is provided below (in thousands).

	December 31,
	2019		2018		2017
Current assets	$	25,664	$	17,539	$	24,582
Noncurrent assets		12,336		10,266		10,490
Liabilities		10,784		8,657		10,113
Partners’ capital		27,216		19,148		24,959
Revenue		62,034		56,410		53,586
Expenses		48,803		55,507		46,436
Net income		13,231		903		7,150

Consolidation Considerations

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.