National Research Corp. hits new highs

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By JEAN ORTIZ/Lincoln Journal Star

The room was quiet.

There were no throngs of camera-carrying, doe-eyed, cheering shareholders.

No impromptu ukulele performances.

National Research Corp. Chief Executive Officer Michael Hays looked out onto the 60 or so people gathered for his annual shareholders’ meeting at his company’s Lincoln headquarters on a recent morning.   He smiled.  

Warren Buffett called, as he does every year before shareholders meetings, Hays said, detailing the fictitious phone call.

The Oracle of Omaha offered Hays an apology for trumping his meeting, again, Hays joked. 

“Every year. Every year,” he said, shaking his head.

While Hays can’t yet pack an arena, his meeting fell short in another way from the weekend Berkshire Hathaway gathering known as Woodstock for Capitalists.

Hays’ meeting adjourned in 25 minutes.

He didn’t dwell on gains like a 16 percent increase in net income or a 12 percent increase in annual revenue in 2007.

He left shareholders to thumb through the details in the annual report and to read his letter, which suggested National Research was likely not their best investment, but, hopefully, far from their worst.

As Hays transitioned from the comical to the serious, his take on 2007 was just “OK,” he said.

“It was not a fabulous year,” he said.

And despite his modest summation and the lack of Buffett’s rabid following, success has not eluded the company flying under the radar of analysts, outside investors and Lincolnites alike as it built a name measuring performance in the health care industry. 

Hays will admit a good start in 2008 — posting double-digit percentage first quarter increases in net income and revenue and a record stock price of $30.72 — hit during trading Tuesday.

Company officials recognize around Lincoln they may be better known for their rouge and gold art-deco-themed building at 13th and Q streets than the business dealings within its walls — three floors of which are parking spaces.

Inside, short of spotting a business card, the corporate branding is largely missing. The public entrance includes no grand lobby and no flashy logo.  Just a small sign directs visitors to the sixth floor, where another simple, logo-less lobby awaits.

As Chief Financial Officer Pat Beans stepped off the elevator onto a secured lower level — the distribution point for more than 11.6 million surveys mailed to health care consumers in 2007 — he smiled when asked about the low-profile presence.

“We’re not the biggest promoter of ourselves,” he said.

The company has grown since 1981 when Hays, a former executive with Selection Research Inc., now The Gallup Organization, decided to jump into the performance measurement arena. He knew he wanted to focus on health care.

The company laid its foundation with NRC Picker, a division that continues to measure patient experience and offer tools for improvement. It includes the new Patient-Centered Care Institute, which researches what patients care most about and teaches caregivers how to meet those expectations.

The company grew in 2005 with the purchase of a company that would create the Payer Solutions division geared toward helping health care organizations, including insurers, improve patients’ quality of life.  National Research expanded again the next year when it bought The Governance Institute, which sells memberships to hospital boards for education on topics including finance, capital planning, legal and regulatory issues.

It continues to make changes today, retooling its Healthcare Market Guide from a once-a-year publication to a monthly release of consumer opinions offering health care providers more current feedback on their services.

The publication produces a myriad of facts and figures, from rankings of hospitals across the country to tracking of trends like how much consumers are using the Internet to find answers to their health questions.

From Beans’ perspective, each division is a runway for revenue growth.

The positioning for growth covers more than its company divisions or even its financial statistics.

National Research’s headquarters are designed with reconfigurable work stations and no private offices — even for Hays and Beans. That makes it easier to create new teams and make other adjustments as the company grows and changes, Beans said.

Today, the company has 1,100 clients, including Cedars-Sinai, Kaiser Permanente and the Mayo Clinic. It has clients in Hawaii, Alaska, Canada and the Bahamas.  Nebraska makes up a very small piece of its business.

In Lincoln, its clients include BryanLGH, Lincoln Surgical Hospital and the Nebraska Heart Institute, said Jon Zvolanek, vice president of operations.

Lincoln Chamber of Commerce Vice President of Operations Stephanie Dostal described the company as humble.

She agreed that most locals may not know the specifics of National Research’s business, but it’s no doubt worthy of recognition for its contributions to the community, she said.

The Lincoln Young Professionals Group recently recognized National Research as the “Employer of Choice” for the opportunities it provides young professionals, said Dostal, who serves as liaison to the group.

“They’re a great partner in Lincoln and a great company,” she said. “We think they’re doing the right thing to keep young people here in Lincoln.”

The company, whose stock is thinly traded despite its growth, still draws the interest of only one market analyst. Insiders, meanwhile, hold about 75 percent of the company’s stock. Hays, with more than 4.8 million shares, makes up the bulk of that.

For now, that works just fine, Beans said.

“Our leadership is very aligned with the shareholders,” he said.

The company has seen relatively good growth, maintained good margins in good times and bad, Beans said. That puts National Research in a position to focus on its “runways” and do it profitably.

“What we’re really focused on is growing the revenue and earnings on a constant ongoing basis with the feeling that if we focus on that, the stock price will follow,” he said.

Reach Jean Ortiz at 473-7107 or jortiz@journalstar.com.

On the Web:

http://www.nationalresearch.com