Investor Relations Contact:
Kevin Karas, Chief Financial Officer at 402.475.2525 or click here for more information.
TO OUR SHAREHOLDERS:
Your Company has been fortunate over the decades in attracting great associates dedicated to serving some of the best names in healthcare, all aligned in making it better for the patient.
This simple formula has resulted in many positive outcomes for the Company, one of which is our remarkably consistent financial performance. As they say, “Up and to the right is a nice trend line,” for which we are pleased the year 2012 added to again. Your Company also finds itself in the middle of a wonderful perfect storm of opportunity in healthcare, the largest sector of the economy. What could be better, right?
Well, be careful what you wish for. I’m learning that some of the strengths that brought us to the dance can create unintended consequences.
The intersection of “predictable financial performance” and “unbridled need for our solutions” is attracting a great amount of investor interest. However, given our concentrated ownership and limited availability of shares for sale, this demand remains unfilled. Clearly, buy and hold and concentrated ownership can be a good thing. In fact, I recall years ago being asked by Wall Street types what our dot-com strategy was, only to have our obituary written when I said our dot-com strategy was to not have one. Our ownership profile allows us to avoid reacting to Wall Street’s latest craze, which has served us well.
But these same attributes are also to blame for poor shareholder liquidity. When I hear investors lamenting how hard it is to build a position in NRC stock, I quickly suggest they understand and like where we are headed, given the only thing harder than building a position, is liquidating one.
For the long-term future of the Company, we must ensure liquidity with the appropriate balance between supply and demand. We must reach this balance without disrupting the positive elements inherent in our ownership structure; not an easy task, but we have a great example to follow.
Our plan is to first do no harm. Many public companies have liquidity problems and often resolve them by simply offering new shares to new shareholders. If we followed this path, current shareholders’ ownership and voting power would be diluted and the Company would face an increased financial burden to maintain historical dividend payments across a larger number of shares without reducing cash resources to grow the business. As well, Wall Street would become our chief strategy officer.
Our plan is to create a new class of stock while retaining our current class of stock, not unlike the dual class stock plan Warren Buffett implemented at Berkshire Hathaway. Following the Berkshire example of its Baby B’s (as many call their new shares), our new class of shares will have far less voting power and will receive only a fractional amount of any divided payments that may be paid.
This new class of stock will be granted via a stock dividend to every current shareholder so they will have exactly the same voting, equity interest and dividend participation then as they have now, just split across a greater number of shares.
When other companies have increased their number of shares via a stock split, trading volume has increased creating more available shares for new investors to purchase. If this holds true for NRC stock, we will have helped address our supply and demand problem, and done so without harm to any current shareholder.
The dual class stock approach we are proposing that will be voted upon at our annual meeting, has been taken by only a very few public companies. One common element of companies with a dual stock structure seems to be organizations where management decisions are being made through the lens of fellow shareholders.
I look forward to seeing you at our upcoming shareholder meeting.
Michael D. Hays,
Chief Executive Officer and Fellow Shareholder