NRC Health Reports Decline in Revenue and Operating Income for Q2 2025

National Research Corporation (NRC Health) reported a decline in financial performance for the second quarter of 2025, with total revenue of $34.0 million, down 3% from $35.0 million in the same period last year. For the first half of 2025, revenue also decreased by 4% to $67.6 million compared to $70.3 million in the first half of 2024. The company attributed this decline primarily to a decrease in recurring revenue from existing clients, which fell by $1.3 million, and a reduction in non-recurring revenue. However, revenue from new clients increased by $419,000, indicating some growth potential.

Operating income for the second quarter of 2025 was $1.6 million, a significant drop of 82% from $8.9 million in the prior year. The decrease in operating income was largely driven by increased selling, general, and administrative expenses, which rose by 58% to $17.7 million, primarily due to higher salaries and benefits associated with new compensation arrangements for executive leadership. The effective tax rate also saw a notable increase to 118% from 26% in the previous year, influenced by limitations on executive compensation deductions.

In terms of strategic developments, NRC Health appointed Trent Green as the new Chief Executive Officer effective June 1, 2025. Green brings over 25 years of healthcare leadership experience, which the company hopes will drive future growth. Additionally, NRC Health has been actively managing its capital structure, with a focus on funding innovation and growth investments, including potential mergers and acquisitions. The company has also initiated a stock repurchase program, authorizing the buyback of up to 1 million shares, with 381,736 shares repurchased in the second quarter for approximately $5.8 million.

Operationally, NRC Health reported a Total Recurring Contract Value (TRCV) of $137.0 million as of June 30, 2025, a slight decrease from $138.4 million a year earlier. The company noted an increase in its retention rate by 2% compared to the same period last year, suggesting improved client loyalty. However, the overall decline in TRCV indicates challenges in acquiring new contracts to offset losses from existing ones. The company’s cash and cash equivalents increased to $5.3 million, supported by borrowings from its Delayed Draw Term Loan, which stood at $82.4 million at the end of the quarter.

Looking ahead, NRC Health anticipates that sustained growth in TRCV could lead to revenue growth in the coming quarters, although the company remains cautious about market conditions and competition. The management is focused on enhancing operational efficiencies and investing in innovative solutions to improve client engagement and retention. Despite the current challenges, NRC Health believes its existing liquidity sources and operational cash flows will be sufficient to meet its capital and debt obligations in the foreseeable future.