# NRC HEALTH (NRC)

Informational only - not investment advice.

CIK: 0000070487
SIC: 8731 Services-Commercial Physical & Biological Research
SIC breadcrumb: [Services](/division/I/) > [SIC Major Group 87](/major-group/87/) > [SIC 8731 Services-Commercial Physical & Biological Research](/industry/8731/)
Latest 10-K filed: 2026-03-05
SEC page: https://www.sec.gov/edgar/browse/?CIK=70487
Filing source: https://www.sec.gov/Archives/edgar/data/70487/000143774926007002/nrc20251231_10k.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 137390000 | USD | 2025 | 2026-03-05 |
| Net income | 11600000 | USD | 2025 | 2026-03-05 |
| Assets | 134878000 | USD | 2025 | 2026-03-05 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000070487.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2009 | 2010 | 2011 | 2012 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  |  |  |  | 117,559,000 | 119,686,000 | 127,982,000 | 133,277,000 | 147,954,000 | 151,568,000 | 148,580,000 | 143,060,000 | 137,390,000 |
| Net income |  |  |  |  |  | 20,518,000 | 22,943,000 | 30,047,000 | 32,406,000 | 37,260,000 | 37,466,000 | 31,800,000 | 30,971,000 | 24,783,000 | 11,600,000 |
| Operating income |  |  |  |  |  | 31,197,000 | 34,219,000 | 35,275,000 | 43,035,000 | 42,677,000 | 50,270,000 | 46,543,000 | 40,045,000 | 35,194,000 | 22,590,000 |
| Diluted EPS |  | 1.26 | 1.69 | 2.17 |  |  |  |  | 1.26 | 1.45 | 1.46 | 1.27 | 1.25 | 1.04 | 50.00 |
| Operating cash flow |  |  |  |  |  | 26,843,000 | 28,091,000 | 39,848,000 | 40,917,000 | 40,636,000 | 46,344,000 | 36,265,000 | 38,113,000 | 34,625,000 | 26,450,000 |
| Capital expenditures |  |  |  |  |  | 3,973,000 | 4,568,000 | 5,971,000 | 4,656,000 | 3,984,000 | 5,514,000 | 9,835,000 | 15,779,000 | 15,448,000 | 10,706,000 |
| Dividends paid |  |  |  |  |  | 28,552,000 | 16,867,000 | 16,859,000 | 31,299,000 | 10,517,000 | 9,159,000 | 20,961,000 | 36,366,000 | 11,453,000 | 10,978,000 |
| Share buybacks | 84,000 | 399,000 |  |  | 1,673,000 |  |  |  |  |  | 4,142,000 | 27,616,000 | 19,099,000 | 30,945,000 | 20,180,000 |
| Assets |  |  |  |  |  | 120,624,000 | 127,316,000 | 108,032,000 | 110,685,000 | 133,423,000 | 157,540,000 | 130,461,000 | 122,437,000 | 132,539,000 | 134,878,000 |
| Liabilities |  |  |  |  |  | 37,818,000 | 37,275,000 | 88,949,000 | 77,793,000 | 69,108,000 | 72,203,000 | 58,428,000 | 73,482,000 | 101,255,000 | 120,888,000 |
| Stockholders' equity |  |  |  |  |  | 82,806,000 | 90,041,000 | 19,083,000 | 32,892,000 | 64,315,000 | 85,337,000 | 72,033,000 | 48,955,000 | 31,284,000 | 13,990,000 |
| Cash and cash equivalents |  |  |  |  |  | 33,021,000 | 34,733,000 | 12,991,000 | 13,517,000 | 34,690,000 | 54,361,000 | 25,026,000 | 6,653,000 | 4,233,000 | 4,139,000 |
| Free cash flow |  |  |  |  |  | 22,870,000 | 23,523,000 | 33,877,000 | 36,261,000 | 36,652,000 | 40,830,000 | 26,430,000 | 22,334,000 | 19,177,000 | 15,744,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2009 | 2010 | 2011 | 2012 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  |  |  |  | 19.52% | 25.10% | 25.32% | 27.96% | 25.32% | 20.98% | 20.84% | 17.32% | 8.44% |
| Operating margin |  |  |  |  |  |  | 29.11% | 29.47% | 33.63% | 32.02% | 33.98% | 30.71% | 26.95% | 24.60% | 16.44% |
| Return on equity |  |  |  |  |  | 24.78% | 25.48% | 157.45% | 98.52% | 57.93% | 43.90% | 44.15% | 63.26% | 79.22% | 82.92% |
| Return on assets |  |  |  |  |  | 17.01% | 18.02% | 27.81% | 29.28% | 27.93% | 23.78% | 24.38% | 25.30% | 18.70% | 8.60% |
| Liabilities / equity |  |  |  |  |  | 0.46 | 0.41 | 4.66 | 2.37 | 1.07 | 0.85 | 0.81 | 1.50 | 3.24 | 8.64 |
| Current ratio |  |  |  |  |  | 1.49 | 1.62 | 0.60 | 0.76 | 1.71 | 1.82 | 1.31 | 0.67 | 0.55 | 0.55 |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000070487.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q2 | 2022-06-30 |  |  | 0.33 | reported discrete quarter |
| 2022-Q3 | 2022-09-30 |  |  | 0.33 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.28 | reported discrete quarter |
| 2023-Q2 | 2023-03-31 |  | 6,964,000 |  | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 36,161,000 |  | 0.29 | reported discrete quarter |
| 2023-Q3 | 2023-06-30 |  | 7,273,000 |  | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 37,945,000 |  | 0.32 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 38,001,000 | 8,858,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 35,313,000 | 6,359,000 | 0.27 | reported discrete quarter |
| 2024-Q2 | 2024-03-31 |  | 6,359,000 |  | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 35,021,000 |  | 0.26 | reported discrete quarter |
| 2024-Q3 | 2024-06-30 |  | 6,175,000 |  | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 35,819,000 |  | 0.24 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 36,906,000 | 6,560,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 33,551,000 | 5,787,000 | 0.25 | reported discrete quarter |
| 2025-Q2 | 2025-03-31 |  | 5,787,000 |  | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 34,038,000 |  | -0.01 | reported discrete quarter |
| 2025-Q3 | 2025-06-30 |  | -106,000 |  | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 34,608,000 |  | 0.18 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 35,194,000 | 1,798,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 34,803,000 | 3,222,000 | 0.14 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/70487/000143774926015083/nrc20260331_10q.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-05-06
Report date: 2026-03-31

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q.

Our purpose is to humanize healthcare and support organizations in their understanding of each unique individual. Our commitment to Human Understanding® helps leading healthcare systems improve their operations through understanding each person they serve not as point-in-time insights, but as an ongoing relationship. Our end-to-end solutions enable our customers to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships. Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market. We believe access to, analysis of, and acting on our extensive individual-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships, build loyalty, and improve processes.

Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty. We partner with customers across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as the evolving healthcare landscape drives its constituents towards a more collaborative and integrated service model.

15

Table of Contents

Results of Operations

The following table sets forth, for the periods indicated, selected financial information derived from our condensed consolidated financial statements and the percentage change in such items versus the prior comparable period, as well as other key financial metrics. The discussion that follows the information should be read in conjunction with our condensed consolidated financial statements.

Three Months Ended March 31, 2026, Compared to Three Months Ended March 31, 2025

(In thousands, except percentages)

Three Months Ended March 31,

Percentage

Increase

(Decrease)

2026

2025

2026 over 2025

Revenue

$

34,803

$

33,551

4

Direct expenses

13,646

13,057

5

Selling, general, and administrative

13,419

10,356

30

Depreciation and amortization

2,169

1,542

41

Operating income

5,569

8,596

(35

)

Total other expense

(1,190

)

(873

)

36

Provision for income taxes

1,157

1,936

(40

)

Effective Tax Rate

26

%

25

%

1

Operating margin

16

%

26

%

(10

)

Total Recurring Contract Value

$

152,070

$

134,371

13

Cash provided by operating activities

7,180

6,646

8

Revenue. Revenue in the 2026 period increased compared to the 2025 period by $1.3 million. This was mainly from $0.6 million higher recurring revenue from existing customers compared to the prior year, and $0.5 million higher revenue from new customers, compared to the prior year.

Direct expenses. Direct expenses consist primarily of salaries and employee benefits, employee travel and lodging, materials, contract labor, third party software subscription costs, hosted customer conferences, and other direct expenses associated with revenue. Personnel costs within direct expenses are associated with individuals in product delivery, customer support, thought leadership, conference support, technology infrastructure, and product development. Direct expenses represented 39% of revenue for both 2026 and 2025. Direct expenses increased to $13.6 million in 2026 from $13.1 million in 2025, primarily driven by higher third‑party software subscription costs and increased spending on IT contractor services related to continued investments in technology and development.

Selling, general, and administrative expenses. Selling, general, and administrative expenses consist of salaries and employee benefits, commission and amortization of deferred commission, stock-based compensation, employee travel and lodging, third party software subscription and platform costs, marketing costs, facility expenses, office expenses, fees for professional services, provision for credit losses, and other operational expenses. Personnel costs within selling, general, and administrative expenses are associated with individuals in sales, marketing, accounting, business development, human resources, administrative, product development, internal information systems, and executive management. Selling, general, and administrative expenses increased to $13.4 million for the three months ended March 31, 2026, from $10.4 million for the same period in 2025. The increase was primarily driven by $1.4 million of higher stock‑based compensation related to executive leadership and approximately $0.5 million of executive salary expense that was not present in the prior‑year period. The remaining increase was attributable to higher computer software subscription expenses to support ongoing technology investments, regulatory-related accruals, and the timing of corporate‑related expenses.

Depreciation and amortization. Depreciation and amortization expenses increased in the 2026 period compared to the 2025 period due to the completion of our headquarters building renovations in June 2025. 

Operating income and margin. Operating income decreased in the 2026 period compared to the 2025 period due to the increased compensation related to our executive leadership transition and increased investment in technology. 

Total other expense. Total other expense increased in the 2026 period compared to the 2025 period due to higher interest expense due to a higher balance on the Delayed Draw Term Loan.

16

Table of Contents

Provision for income taxes and effective tax rate. Provision for income taxes decreased in the 2026 period compared to the 2025 period primarily due to decreased taxable income, partially offset by an increase in the effective tax rate. The effective tax rate increased in the 2026 period due to executive compensation subject to the deductibility limitations under Section 162(m), which did not affect the effective tax rate in the first quarter of 2025.

Total Recurring Contract Value (TRCV). TRCV at March 31, 2026, was higher compared to March 31, 2025, primarily due to sales to new and existing customers and to improved retention of contracts with existing customers. We view TRCV as a leading indicator of our future revenue trends. TRCV represents the total annualized contract value of recurring amounts under customer contracts that are in effect or contractually committed as of the most recent quarter-end and are expected to be in force over the subsequent 12 months, based on contractual pricing and term provisions. TRCV is calculated using contracted recurring fees and assumes no upsells, downsells, price changes, early terminations, or non-renewals, unless we have been notified of such changes by the customer as of the measurement date. TRCV is an operating metric and is not a measure of revenue recognized under U.S. GAAP. The timing and amount of revenue we recognize under ASC 606 may differ from the pattern implied by TRCV due to allocation of transaction price and the timing of satisfaction of performance obligations. As a result, there is typically a lag between changes in TRCV and changes in our reported revenue. Generally, if we are able to sustain growth in TRCV, we would expect revenue growth to follow within subsequent periods, although intervening factors may affect this relationship.

Recent Developments

In April 2026, the Compensation and Talent Committee of our Board of Directors approved amendments to equity awards granted to certain executives in 2025. The amendments eliminated the Company’s right to repurchase the shares underlying these awards if the executives’ employment terminated under certain circumstances prior to the third anniversary of the respective grant dates. The impacted executives were also awarded bonuses intended to cover their anticipated tax obligations in connection with these amendments.

The amendments and related bonuses are expected to result in approximately $9.4 million of expense during the second quarter of 2026, consisting of (i) approximately $6.5 million of non-cash accelerated equity compensation expense, substantially all of which would otherwise have been recognized ratably through the second quarter of 2028, and (ii) approximately $2.9 million of cash bonus expense, primarily related to tax payments. The Company’s effective tax rate for the second quarter and the remainder of 2026 is expected to be impacted by the non-deductibility of these amounts. The acceleration of equity compensation expense eliminates the impact of these awards on future periods.

Non-GAAP Financial Measures

In addition to consolidated GAAP financial measures, we review various non-GAAP financial measures that management believes to be important in the evaluation of its operating results and performance, including “Adjusted Net Income,” “Adjusted Earnings per Share,” “Adjusted EBITDA,” “Adjusted EBITDA Margin,” “Free Cash Flow,” and “Free Cash Flow Margin.”

We believe Adjusted Net Income, Adjusted Earnings per Share, Adjusted EBITDA, and Adjusted EBITDA Margin are helpful supplemental measures to assist management and investors in evaluating our operating results as (i) they exclude certain items that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of our business, and (ii) the exclusion of non-cash stock compensation is useful for investors applying certain valuation metrics and is consistent with the leverage ratio for our credit facility. Adjusted Net Income represents net income adjusted to add back certain management bonuses and non-cash stock compensation and the related tax. Adjusted EBITDA represents net income before interest, taxes, depreciation, amortization, certain management bonuses, and non-cash stock compensation items. Adjusted EBITDA Margin represents Adjusted EBITDA divided by our revenue.

We consider Free Cash Flow to be a measure that provides useful information to management and investors about our liquidity. Free Cash Flow does not represent residual cash flow available for discretionary expenditures. We define Free Cash Flow as net cash provided by operating activities less capital expenditures. Free Cash Flow Margin represents Free Cash Flow divided by our revenue.

We view Adjusted Net Income, Adjusted Earnings per Share, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, and Free Cash Flow Margin as operating performance measures. As such, we believe the most directly comparable GAAP financial measures to Adjusted Net Income and Adjusted Earnings per Share are GAAP Net Income and GAAP Earnings per Share, respectively, the most directly comparable GAAP financial measure to Adjusted EBITDA and Adjusted EBITDA Margin is GAAP Net Income and GAAP Net Income Margin, and the most directly comparable GAAP financial measure to Free Cash Flow and Free Cash Flow Margin is GAAP Net Cash Provided by Operating Activities and GAAP Net Cash Provided by Operating Activities Margin.

17

Table of Contents

Non-GAAP measures are supplemental financial measures of our performance and should not be considered substitutes for net income, earnings per share, or any other measure derived in accordance with GAAP. This information should be read only in conjunct

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations 

The following discussion and analysis provides a summary of significant factors relevant to our financial performance and condition. It should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Form 10-K. This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Overview

Our purpose is to humanize healthcare and support organizations in their understanding of each unique individual. Our commitment to Human Understanding® helps leading healthcare systems improve their operations through understanding each person they serve not as point-in-time insights, but as an ongoing relationship. Our end-to-end solutions enable our customers to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships. Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market. We believe access to, analysis of, and acting on our extensive individual-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships, build loyalty, and improve processes.

Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty. We partner with customers across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as the evolving healthcare landscape drives its constituents towards a more collaborative and integrated service model.

Critical Accounting Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein. The following area is considered a critical accounting estimate because it involves significant judgments or assumptions, involves complex or uncertain matters or is susceptible to change, and the impact could be material to our financial condition or operating results:

●

Revenue recognition

Revenue Recognition

We derive a majority of our revenue from renewable subscription-based service agreements with our customers. We also derive revenue from fixed, non-subscription arrangements. Our revenue recognition policy requires management to estimate, among other factors, the future contract consideration we expect to receive under variable consideration subscription arrangements as well as future total estimated contract costs over the contract term with respect to fixed, non-subscription arrangements. If management made different judgments and estimates, then the amount and timing of revenue for any period could differ from the reported revenue. See Notes 1 and 3 to our consolidated financial statements for a description of our revenue recognition policies.

21

Table of Contents

Recent Trends

Since the fourth quarter of 2024, Total Recurring Contact Value (“TRCV”) has increased each quarter while revenue per associate and direct selling expenses have improved, giving us confidence about the Company’s financial direction despite certain non-recurring severance and compensation expenses associated with management changes during 2024 and 2025.

Our GAAP revenue and operating margin declined since 2023 primarily due to lower new sales and retention rates prior to 2025, which stemmed from sales force changes and less robust product innovation from 2020 through early 2024 as well as the non-recurring costs mentioned above. TRCV, our leading indicator of revenue expectations, declined through the third quarter of 2024. During 2024 and 2025, we made significant changes in our senior management, developed and marketed innovative new products, acquired our rounding tool, and reconstituted a motivated sales force. We also implemented efficiency measures that have allowed us to enhance our customers’ experience while lowering direct expenses and our total number of associates. With TRCV growing and a lower expense run rate, we expect revenue, operating margin, and operating cash flow to grow in 2026.

Key Financial Metrics and Results of Operations

The following table sets forth, for the periods indicated, selected financial information derived from our consolidated financial statements and the percentage change in such items versus the prior comparable period, as well as other key financial metrics. The discussion that follows the information should be read in conjunction with our consolidated financial statements.

(In thousands, except percentages)

Year Ended December 31,

Percentage

Increase (Decrease)

2025

2024

2023

2025

over

2024

2024

over

2023

Revenue

$

137,390

$

143,060

$

148,580

(4

)

(4

)

Direct expenses

52,371

56,933

56,015

(8

)

2

Selling, general, and administrative

54,805

44,911

46,621

22

(4

)

Depreciation and amortization

7,624

6,022

5,899

27

2

Operating income

22,590

35,194

40,045

(36

)

(12

)

Total other expense

(4,745

)

(2,504

)

(83

)

89

2,917

Provision for income taxes

6,245

7,907

8,991

(21

)

(12

)

Effective Tax Rate

35

%

24

%

22

%

11

2

Operating Margin

16

%

25

%

27

%

(9

)

(2

)

Total Recurring Contract Value

144,143

133,218

141,855

8

(6

)

Cash provided by operating activities

26,450

34,625

38,113

(24

)

(10

)

Total Recurring Contact Value (TRCV). We view TRCV as a leading indicator of revenue expectations. TRCV increased in 2025 compared to 2024 primarily due to sales to new and existing customers, and to improved retention of contracts with existing customers. Our TRCV metric represents the amount of revenue projected to be recognized over the next 12 months from renewable contracts and is measured as of the most recent quarter end. TRCV assumes no upsells, downsells, price increases, or cancellations, unless we have been notified by a customer of any such change as of the relevant date. There is a lag between changes in TRCV (next twelve months) and revenue (trailing twelve months). Generally, if we are able to sustain growth in TRCV, we would expect revenue growth to follow within the next few quarters (and vice versa). However, intervening events may affect this general expectation.

Since December 31, 2025, the Company’s TRCV has increased from $144.1 million to $152.0 million at March 4, 2026, representing an all-time high for this metric. This growth reflects continued progress in executing the Company’s strategy to grow long-term, subscription-based relationships with large healthcare systems.

Revenue. Revenue in 2025 decreased compared to 2024 by $5.7 million. This was mainly from decreased recurring revenue in our existing customer base.

Direct expenses. Direct expenses consist primarily of salaries and employee benefits, employee travel and lodging, materials, contract labor, third party software subscription costs, hosted customer conferences, and other direct expenses associated with revenue. Personnel costs within direct expenses are associated with individuals that facilitate the product delivery, handle customer support calls or inquiries, provide thought leadership and conference support, manage the technology infrastructure for our applications, and develop software and products. Direct expenses represented 38% of revenue in 2025 and 40% of revenue in 2024. The decrease in expense beyond the decrease due to the reduction in revenue was due to a reduction in labor costs through operations automation and moving to a lower cost model for technology support and development.

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Selling, general and administrative expenses. Selling, general, and administrative expenses consist of salaries and employee benefits, commission and amortization of deferred commission, stock-based compensation, employee travel and lodging, third party software subscription and platform costs, marketing costs, facility expenses, office expenses, fees for professional services, provision for credit losses, and other operational expenses. Personnel costs within selling, general, and administrative expenses are associated with our sales team, marketing personnel, and individuals associated with normal corporate functions including accounting, business development, human resources, administrative, internal information systems, and executive management. Selling, general, and administrative expenses increased $9.9 million primarily due to $6.6 million in bonuses related to our executive leadership transition, and $3.0 million in stock compensation related to new executive leadership compensation arrangements. Marketing expenses decreased by $2.4 million, which was offset by an increase in professional fees, technology expense, and bad debt expense.

Depreciation and amortization. Depreciation, amortization and impairment expenses increased in 2025 compared to the 2024 period due to the completion of our headquarters building renovations in June 2025.

Operating income and margin. Operating income and margin decreased in 2025 compared to 2024 due to the decline in revenue and the increased compensation expense related to our executive leadership transition.

Total other income (expense). Total other expense increased in the 2025 period compared to the 2024 period primarily due to higher interest expense due to a higher balance on the Delayed Draw Term Loan.

Provision for income taxes and effective tax rate. Provision for income taxes decreased in 2025 compared to 2024 primarily due to decreased taxable income, offset by an increase in the effective tax rate. The effective tax rate increased due to executive compensation exceeding Section 162(m) limits and state income taxes which fluctuate based on various apportionment factors. See Note 6, “Income Taxes,” to our Consolidated Financial Statements contained in this report for additional information on the change in the effective tax rates. 

Non-GAAP Financial Measures

In addition to consolidated GAAP financial measures, NRC Health reviews various non-GAAP financial measures that management believes to be important in the evaluation of its operating results and performance, including “Adjusted Net Income,” “Adjusted Earnings per Share,” “Adjusted EBITDA”, and “Adjusted EBITDA Margin.” NRC Health believes Adjusted Net Income, Adjusted Earnings per Share, Adjusted EBITDA, and Adjusted EBITDA Margin are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as (i) they exclude certain items that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of NRC Health’s business, and (ii) the exclusion of non-cash stock compensation is useful for investors applying certain valuation metrics and is consistent with the leverage ratio for our Credit Agreement.

We view Adjusted Net Income, Adjusted Earnings per Share, Adjusted EBITDA, and Adjusted EBITDA Margin as operating performance measures. As such, we believe the most directly comparable GAAP financial measures to Adjusted Net Income and Adjusted Earnings per Share are GAAP Net Income and GAAP Earnings per Share, respectively, and the most directly comparable GAAP financial measure to Adjusted EBITDA and Adjusted EBITDA Margin is GAAP Net Income and GAAP Net Income Margin.

Non-GAAP measures are supplemental financial measures of our performance and should not be considered substitutes for net income, earnings per share, or any other measure derived in accordance with GAAP. This information should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items or events being adjusted. In addition, other companies may use different measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP.

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Adjusted Net Income and Adjusted Earnings per Share

We define Adjusted Net Income as net income adjusted to add back certain non-recurring executive compensation and non-cash stock compensation and the related tax. The following table presents a reconciliation of Adjusted Net Income to net income for each of the periods indicated (in thousands excluding earnings per share):

Year ended December 31

2025

2024

2023

Net income

$

11,600

$

24,783

$

30,971

Add back:

Non-recurring executive compensation

6,640

-

-

Tax on non-recurring executive compensation

(468

)

-

-

Non-cash stock compensation

3,312

284

935

Tax on stock compensation

(346

)

(70

)

(228

)

Adjusted net income

$

20,738

$

24,997

$

31,678

Earnings per share of common stock:

Basic

$

0.50

$

1.05

$

1.26

Diluted

$

0.50

$

1.04

$

1.25

Adjusted earnings per share of common stock:

Basic

$

0.93

$

1.05

$

1.29

Diluted

$

0.93

$

1.05

$

1.28

Weighted average shares and share equivalents outstanding:

Basic

22,383

23,703

24,540

Diluted

22,396

23,743

24,673

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net income before interest expense, taxes, depreciation, amortization, certain non-recurring executive compensation, and non-cash stock compensation items. The following table presents a reconciliation of Adjusted EBITDA to net income for each of the periods indicated (in thousands):

Year ended December 31

2025

2024

2023

Net income

$

11,600

$

24,783

30,971

Add back:

Depreciation and amortization

7,624

6,022

5,899

Interest expense

4,762

2,595

862

Income taxes

6,245

7,907

8,991

Non-recurring executive compensation

6,640

-

-

Non-cash stock compensation

3,312

284

935

Adjusted EBITDA

$

40,183

$

41,591

$

47,658

Net income margin

8.4

%

17.3

%

20.8

%

Adjusted EBITDA margin

29.2

%

29.1

%

32.1

%

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Liquidity and Capital Resources

Our business historically has generated significant cash for allocation in accordance with corporate priorities. Our Board of Directors has established priorities for capital allocation, which include funding of innovation and growth investments, including merger and acquisition activity as well as internal projects, and returning capital to shareholders through dividends and share repurchases.

As of December 31, 2025, our principal sources of liquidity included $4.1 million of cash and cash equivalents, up to $30 million of unused borrowings under our Revolving Loan and an additional $27.6 million on our Delayed Draw Term Loan.

Our cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred income taxes, share-based compensation and related taxes, reserve for uncertain tax positions, change in fair value of contingent consideration, amortization of debt issuance costs, loss on disposal of property and equipment, and the effect of working capital changes. Cash provided by operating activities decreased primarily due to decreased net income net of non-cash items, partially offset by working capital changes. Working capital changes mainly consisted of changes in deferred contract costs primarily due to the timing of commissions and incentives and related amortization and accrued wages and incentives.

See the Consolidated Statements of Cash Flows included in this report for the detail of our operating cash flows.

We had a working capital deficit of $16.4 million and $16.3 million on December 31, 2025, and December 31, 2024, respectively. Notwithstanding our working capital deficit on December 31, 2025, we believe that our existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet our projected capital and debt maturity needs for the foreseeable future. 

Cash used in investing activities primarily consisted of payments for the purchases of property and equipment including computer software and hardware, building improvements, and furniture and equipment.

Cash used in financing activities consisted of payments for borrowings under the Delayed Draw Term Loan and Revolving Loan. We also used cash to repurchase shares of our common stock for treasury, to pay dividends on common stock and for payment of payroll tax withholdings on options exercised. This was partially offset by cash provided from borrowings on the Revolving Loan and Delayed Draw Term loan.

Our material cash requirements include the following contractual and other obligations:

Dividends

Cash dividends in the aggregate amount of $11.8 million, $11.3 million, and $36.3 million were declared in 2025, 2024, and 2023, respectively. Dividends were paid from cash on hand and borrowings on our line of credit. The payment and amount of future dividends, if any, is at the discretion of our Board of Directors and will depend on our future earnings, financial condition, general business conditions, alternative uses of our earnings and cash and other factors. In the fourth quarter of 2025, our Board of Directors increased the quarterly cash dividend payable from 12 cents per share to 16 cents per share commencing with the dividend payable in January 2026.

Capital Expenditures

We paid cash of $10.7 million for capital expenditures in the year ended December 31, 2025. These expenditures consisted of building improvements, furniture and equipment, computer hardware, and costs related to software development for our Human Understanding® solutions.

Debt

In February 2025, we entered into a new credit agreement (the “Credit Agreement”), which includes (i) a $30.0 million revolving credit facility (the “Revolving Loan”) and (ii) a $110.0 million delayed draw-down term facility (the “Delayed Draw Term Loan” and, together with the Revolving Loan, the “Credit Facilities”). The Delayed Draw Term Loan includes an accordion feature that, so long as no event of default exists or would exist after giving effect to such increase, allows us to request an increase in the Delayed Draw Term Loan of up to the lesser of (x) $25.0 million and (y) our EBITDA as of the preceding four fiscal quarters, exercisable in increments of $10.0 million (or the remaining available amount of the accordion, if less). We may use the Delayed Draw Term Loan to fund permitted future business acquisitions, repurchases of our common stock, capital expenditures, or payment of dividends and the Revolving Loan to fund ongoing working capital needs and for other general corporate purposes.

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Interest accrues and is payable monthly at a floating rate equal to the one-month Term SOFR plus a percentage per annum determined by our cash flow leverage ratio, ranging from 2.25% to 2.75% (6.22% at December 31, 2025).

The outstanding balance on the Delayed Draw Term Loan was $79.4 million at December 31, 2025. Principal amounts outstanding under the Delayed Draw Term Loan are due and payable monthly during the term of the Delayed Draw Term Loan, in equal monthly installments to amortize the aggregate outstanding principal balance by (i) 5% during each of the first three years and (ii) 7.5% during each of the fourth and fifth years following the date of such loan. All outstanding principal and interest on the Delayed Draw Term Loan are due and payable in full at the maturity date, February 6, 2030. We had the availability to borrow an additional $27.6 million on the Delayed Draw Term Loan at December 31, 2025, excluding the accordion feature.

Principal amounts outstanding under the Revolving Loan are due and payable in full at maturity at February 6, 2028. As of December 31, 2025, we had no borrowings outstanding and the availability to borrow $30.0 million on the Revolving Loan. Our weighted average short-term borrowings for the years ended December 31, 2025, and 2024, were $3.1 million and $8.5 million, respectively. The weighted average interest rate on short-term borrowings during the years ended December 31, 2025, and 2024 was 6.63% and 7.52%, respectively.

We are obligated to pay ongoing unused commitment fees quarterly in arrears at a percentage per annum determined by our cash flow leverage ratio, ranging from 0.15% to 0.30%, based on the actual daily unused portions of the Revolving Loan and the Delayed Draw Term Loan, respectively.

The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants), and events of default. The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our common stock, and acquisitions, subject in each case to certain exceptions. Pursuant to the Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of 1.10x and a cash flow leverage ratio of 3.50x or less for all testing periods throughout the term of the Credit Facilities. As of December 31, 2025, we were in compliance with our financial covenants. 

Leases

We have lease arrangements for certain computer, office, printing and inserting equipment, and office and data center space. As of December 31, 2025, we had fixed lease payments of $505,000 and $10,000 for operating and finance leases, respectively payable within 12 months. A summary of our operating and finance lease obligations as of December 31, 2025, can be found in Note 9, "Leases", to the Consolidated Financial Statements contained in this report.

Taxes 

The liability for gross unrecognized tax benefits related to uncertain tax positions was $2.4 million as of December 31, 2025. See Note 6, "Income Taxes," to the Consolidated Financial Statements contained in this report for income tax related information.

Purchase Commitments

We generally do not make unconditional, non-cancelable purchase commitments. We enter into purchase orders in the normal course of business, but these purchase obligations do not exceed one year.

Stock Repurchase Program

In May 2022, our Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2,500,000 shares of common stock (the “2022 Program”). During 2025, we repurchased 307,709 shares of our common stock for an aggregate purchase price of $5 million under the 2022 Program, and no shares remained available for purchase under the 2022 Program as of December 31, 2025.

In April 2025, our Board of Directors approved an additional stock repurchase program authorizing the repurchase of up to 1,000,000 shares of common stock (the “2025 Program”). During 2025, we repurchased 1,000,000 shares of our common stock for an aggregate purchase price of $15 million under the 2025 Program, and no shares remained available for purchase under the 2025 Program as of December 31, 2025.

Recent Accounting Pronouncements

See Note 1 to the Consolidated Financial Statements, which is incorporated herein by reference.

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