NRC Health reported its financial results for the first quarter of 2026, revealing a revenue increase of 4% to $34.8 million, compared to $33.6 million in the same period last year. The growth was primarily driven by a $0.6 million rise in recurring revenue from existing customers and an additional $0.5 million from new customers. However, the company's operating income decreased by 35% to $5.6 million, down from $8.6 million in the prior year, largely due to increased selling, general, and administrative expenses, which rose by 30% to $13.4 million, attributed to higher stock-based compensation and executive salaries.
The company's net income for the quarter was $3.2 million, a decline from $5.8 million in the first quarter of 2025. This resulted in earnings per share of $0.14, down from $0.25 a year earlier. The effective tax rate increased slightly to 26% from 25%, influenced by non-deductible executive compensation. Total recurring contract value (TRCV) also saw a 13% increase year-over-year, reaching $152.1 million, indicating a positive trend in customer retention and new sales.
In terms of operational metrics, NRC Health's cash provided by operating activities increased to $7.2 million from $6.6 million in the previous year, reflecting improved working capital management. The company reported a working capital deficit of $18.5 million as of March 31, 2026, compared to $16.4 million at the end of 2025, primarily due to decreases in cash and cash equivalents and increases in accounts payable and deferred revenue. The company ended the quarter with $2.5 million in cash and cash equivalents.
Strategically, NRC Health has been active in managing its capital structure, including a stock repurchase program authorized in March 2026, allowing for the repurchase of up to $60 million of its common stock through March 2028. During the first quarter, the company repurchased 109,701 shares for approximately $1.9 million. Additionally, amendments to equity awards for certain executives were approved, which are expected to result in approximately $9.4 million of expense in the second quarter of 2026.
Looking ahead, NRC Health remains focused on leveraging its subscription-based service model to drive growth and enhance customer relationships. The company anticipates that sustained growth in TRCV will lead to revenue growth in subsequent periods, although it acknowledges potential risks from market conditions and competition. The management believes that existing liquidity sources will be sufficient to meet projected capital and debt maturity needs in the foreseeable future.
About NATIONAL RESEARCH CORP
NRC Health specializes in human-centered healthcare experience management, offering AI-enabled solutions across patient, consumer, employee, and market insights. Its services include feedback collection, performance analysis, reputation management, and strategic consulting for healthcare providers and organizations. Focused exclusively on healthcare, NRC Health leverages long-term client relationships, subscription-based models, and industry expertise to enhance care quality, loyalty, and operational efficiency.
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