RCM TECHNOLOGIES, INC. (RCMT) Business
This page reproduces the company's own Item 1 Business text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Informational only - not investment advice. See Disclaimer.
ITEM 1. BUSINESS
General
RCM Technologies, Inc. is a premier provider of business and technology solutions designed to enhance and maximize its customers' operational performance. The Company provides these services through the deployment of specialty healthcare, engineering, life sciences, information technology services, data management and solutions. For over 50 years, the Company has developed and assembled an extensive portfolio of capabilities, service offerings, and delivery options with world-class technical talent in key end markets and high-growth industries. This combination, paired with RCM’s efficient pricing structure and global reach, offers clients a compelling value proposition.
RCM consists of three operating segments: Specialty Health Care, Engineering, and Life Sciences, Data and Solutions (LS&D).
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The Specialty Health Care segment provides staffing solutions, including medical healthcare professionals, health information management professionals, nurses, paraprofessionals, physicians, and therapists for many of the largest healthcare institutions and school districts across the United States. The segment also provides teletherapy services targeting the education sector with an emphasis on behavioral health. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The Engineering segment provides a comprehensive portfolio of engineering and design services across three verticals: (1) Energy Services, (2) Process & Industrial, and (3) Aerospace. The segment also offers a complementary suite of consulting solutions and services to augment its engineering portfolio, including design and supply of high-quality engineered process solutions and equipment, data management, technical writing and digital documentation across marine, locomotive, transportation and aerospace markets, integrated design and construction, and engineering, procurement and construction management (“EPC”), as well as demand side management/energy conservation services. The business segment staffs engineers to design and build critical infrastructure projects for clients with international coverage. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The Life Sciences, Data and Solutions segment specializes in offering a wide range of services, including enterprise business solutions, application development and support, IT infrastructure deployment and management, and technology and business solutions tailored for the Life Sciences industry and other specific verticals. Additionally, LS&D provides data solutions, digitization, human capital management solutions, and innovative uses of technology to optimize business operations, ranging from process automation to advanced techniques deploying artificial intelligence (“AI”). Our industry-leading Managed Service Offering demonstrates the value of collaborating with customers to foster quality improvements in a seamless, integrated function. |
The Company services some of the largest national and international companies in North America, as well as a lengthy roster of Fortune 1000 and mid-sized global businesses in such industries as Aerospace/Defense, Educational Institutions, the Energy Sector, Financial Services, Healthcare, Life Sciences, Manufacturing & Distribution, the Public Sector, and Technology. RCM sells and delivers its services through a network of approximately 27 offices in selected regions throughout North America and Europe. The Company has staffed key personnel to design and build internationally recognized critical infrastructure projects and retained strategic partners and client accounts for decades.
During the fiscal year ended January 3, 2026, approximately 51.4% of RCM’s total revenue was derived from Specialty Health Care services, 37.7% from Engineering services, and the remaining 10.9% from Life Sciences, Data and Solutions.
Industry Overview
Businesses today face intense competition, the challenge of constant technological change, and the ongoing need to optimize business processes. To address these issues and compete more effectively, companies are continually evaluating the need to implement innovative solutions to upgrade their systems, applications, and processes. As a result, an organization's ability to integrate and align advanced technologies with new business objectives is critical to operational excellence.
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ITEM 1. BUSINESS (CONTINUED)
Industry Overview (Continued)
In the healthcare services industry, a shortage of nurses and other medical personnel in the United States has led to increases in business activity for healthcare service companies, including the Company’s Specialty Health Care group. Due in part to an aging population and improved medical technology, the demand for selected health care professionals is expected to continue over the next several years, with an emphasis on leveraging technology to expand access to care. The increased adoption of telemedicine, an area in which the Specialty Health Care group has developed new service offerings, is a primary example. In addition, public educational institutions are outsourcing their requirements for school nurses, therapists, and paraprofessionals to lower costs, and this trend is expected to continue and grow. Various factors, including the COVID pandemic, technological advances, and patient habits, have also altered patterns of healthcare delivery, with newer models, such as telemedicine, gaining traction. Given federal and state regulatory changes as well as private insurer reimbursement methods, utilization of telemedicine services increased significantly. U.S. Centers for Disease Control and Prevention researchers stated that maintaining telehealth expansion remains critical to providing access to care. It is expected that the total addressable market opportunity will continue to expand. Expanding access to behavioral health and mental well-being is also a priority for public health officials. Increasing and maintaining access to proper care remains a top priority, and the market opportunity for these services is expected to continue to grow.
The Company’s Engineering group remains focused on areas of growth, primarily in utility/electric power, aerospace, marine and transportation, commercial and industrial, oil and gas, and biofuel industries. Given the current composition of its customer base, the Engineering group’s performance is well balanced between its three segments. In recent years, many electric utilities have prioritized transitioning their power generation assets to cleaner energy sources. Much of this transformation is being driven by investments in renewable energy. The Energy Information Administration (“EIA”) estimates that 38% of the United States’ electric generation capacity will be comprised of wind and solar assets by 2050. This expansion will require extensive investment in the nation’s transmission infrastructure to interconnect these renewable resources to the energy grid. Projects of this scale will require engineering and design expertise, as well as the utilization of integrated design and EPC services. The Company believes its Process and Industrial group is positioned well to serve its market. Companies in the chemical industry are reprioritizing spending toward decarbonization technologies, with many U.S. chemical companies expecting to place greater emphasis on renewable feedstocks and new carbon-recycling technologies. The Company believes its process engineering services can play a vital role across this multibillion-dollar opportunity.
Companies increasingly leverage a mix of on-premises, cloud, and hybrid IT infrastructure to optimize operations and remain agile in a rapidly evolving technology landscape. Many organizations are transitioning to cloud-based solutions for scalability, cost-effectiveness, and flexibility while maintaining some on-premises infrastructure for critical or sensitive applications. LS&D’s hybrid approach allows companies to balance control and security with the benefits of cloud resources.
To help companies manage their IT infrastructure effectively, RCM is helping them adopt advanced automation and AI tools to monitor, manage, and optimize their systems. Automation reduces manual intervention, speeds up operations, and improves efficiency, while AI is used for predictive analytics, anomaly detection, and improved decision-making.
Ultimately, as technology evolves, businesses will continue to adapt by embracing more flexible, scalable, and intelligent IT infrastructures that can handle the complexities of a digital-first world while staying resilient against security threats and technological disruptions.
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ITEM 1. BUSINESS (CONTINUED)
Business Strategy
The Company provides solutions to meet its clients’ business needs by delivering specialty healthcare, engineering, life sciences, data and solutions. The Company’s objective is to remain a recognized leader of specialized professional staffing, consulting services and solutions in major markets throughout North America and select international markets. The Company adopts operating strategies to achieve this objective. The following is a discussion of the key elements of its growth and operating strategies:
Growth Strategy
Promote Full Life Cycle Solution Capability
The Company offers a full life-cycle solution to its customers. The goal of the full life cycle solution strategy is to fully address a client’s project implementation cycle at each stage of its design, development, and deployment. This entails the Company working with its clients from the initial conceptualization of a project through its design and execution, and extending into ongoing management and support of the delivered product. RCM’s strategy is to build projects and integrated solutions offerings selectively, utilizing its extensive resource base.
The Company believes that the effective execution of this strategy will generate improved margins on its existing resources. The completion of this service offering continuum is intended to afford the Company the opportunity to strengthen long-term client relationships, thereby further contributing to a more predictable revenue stream.
In addition to a full life-cycle solution offering, the Company continues to focus on transitioning to higher-value services to increase margins across its service lines and generate more sustainable revenue. The Company believes this transition is accomplished by pursuing additional vertical-market-specific solutions in conjunction with, or in combination with, longer-term solutions, expanding its global client relationships, and pursuing strategic alliances and partnerships.
Achieve Internal Growth
The Company continues to promote its internal growth strategies, which are designed to better serve its customers, generate higher revenue, and achieve greater operating efficiency. Every division of the Company continuously focuses on services and on diversifying its client portfolio. Business units are collaborating to penetrate and service accounts as sales teams increase their activity levels. This enables clients to be supported by specialists in their areas of need while RCM productivity increases.
RCM provides an orientation program in which sales managers and professionals receive relevant information about the Company’s operations.
RCM has adopted an industry-centric approach to sales and marketing. This initiative assumes that clients in the same industry sectors tend to share common business challenges. It therefore allows the Company to deliver enhanced value to clients in the vertical markets where RCM has amassed the most experience. RCM’s consultants continue to gain project experience, providing differentiated insight into the business challenges clients in that industry face. This alignment also facilitates and creates additional innovative cross-selling opportunities. The Company believes this strategy will lead to greater account penetration, strategic partnerships, and enhanced client relationships.
Operational strategies contributing to RCM’s internal productivity include delineating new solution practice areas in markets where its clients had historically known the Company as a contract service provider. The formation of these new practice areas facilitates the flow of project opportunities and the delivery of project-based solutions.
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ITEM 1. BUSINESS (CONTINUED)
Growth Strategy (Continued)
Pursue Selective Strategic Acquisitions
The industries in which the Company operates remain highly fragmented, and the Company plans to continue selectively assessing opportunities for strategic acquisitions as they arise. The Company's acquisition strategy is designed to broaden its service offerings and technical competencies, and to grow its full-life-cycle solution capabilities. In considering acquisition opportunities, the Company focuses principally on companies with (i) technologies or market segments RCM has targeted for strategic value enhancement, (ii) margins that are accretive to existing margins, (iii) experienced management personnel, (iv) substantial growth prospects, and (v) sellers who desire to join the Company’s management team. To retain and incentivize management of its acquired companies, the Company has generally structured a significant portion of the acquisition price as multi-tiered consideration based on the acquired company's growth in operating profitability over a two-to-four-year period.
Operating Strategy
Develop and Maintain Strong Customer Relationships
The Company seeks to develop and maintain strong cross-functional customer relationships by anticipating and focusing on its customers’ needs. The Company emphasizes a relationship-oriented, partnership-based approach to business, rather than the transaction- or assignment-oriented approach that the Company believes many of its competitors use. This industry-centric strategy is designed to allow RCM to further expand its relationships with clients in its targeted sectors.
To develop close customer relationships, the Company’s practice managers and/or salespeople regularly meet with both existing and prospective clients to identify areas of need, help design solutions, and identify the resources needed to execute their strategies. The Company’s managers also maintain close communication with their customers during each project and on an ongoing basis after its completion. The Company believes that this relationship-oriented approach can result in greater customer satisfaction. Additionally, the Company believes that by collaborating with its customers to design business solutions, it can generate new opportunities to cross-sell its additional services. The Company focuses on providing customers with qualified individuals or teams of experts aligned with their business needs and makes a concerted effort to monitor the progress of these relationships to ensure their continued success.
Attract and Retain Highly Qualified Consultants and Technical Resources
The Company believes it has been successful in attracting and retaining highly qualified consultants and contractors by (i) providing stimulating and challenging work assignments while fostering a culture of innovation, (ii) offering competitive wages, (iii) effectively communicating with its candidates, (iv) providing selective training to maintain and upgrade skills and (v) aligning the needs of its customers with appropriately skilled personnel. The Company believes it has been successful in retaining these personnel, in part, due to its use of practice managers who are dedicated to maintaining contact with and monitoring the satisfaction levels of the Company’s consultants and contractors while they are on assignment.
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ITEM 1. BUSINESS (CONTINUED)
Specialty Health Care
The Company’s Specialty Health Care Group specializes in long-term and short-term staffing of medical professionals as well as executive search, international recruitment, and placement solutions for many of the largest healthcare institutions and school districts across the United States. The segment’s portfolio of services includes, but is not limited to, the following fields:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Allied and Therapy Staffing: Specializes in recruiting outstanding professionals across the healthcare industry. Our allied healthcare professionals and therapists work in schools, health systems, hospitals, nursing homes, and rehabilitation facilities. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Correctional Healthcare Staffing: Staffing services for local, state, and federal correctional facilities, providing screening, onboarding, and employee assessments, as well as employee and inmate vaccination and treatment services. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Health Information Management: Provide healthcare organizations with experienced medical coding professionals who manage staffing shortages, backlogs, vacation coverage, and long-term coding support. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Nursing Services: Provides nurse placement and staffing services in healthcare facilities, schools, hospitals, and correctional facilities. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Physicians and Advanced Practice: Our national locum tenens (temporary practitioner) practice specializes in placing physicians, physician assistants, and nurse practitioners. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | School Staffing and Recruitment: Provides full-time and part-time nurse employment services for school districts across the country. The Company also offers other healthcare professionals to perform school evaluations and treat students, including occupational and physical therapists, speech-language pathologists, and special education support services, as well as registered behavioral technicians to support students’ individualized education plans and behavioral health needs. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Telepractice: The Company’s teletherapy solution is an evidence-based service delivery option for students to receive Special Education services such as Speech-Language Therapy, Occupational Therapy, Physical Therapy, Behavioral and Mental Health services, and other healthcare services through an online platform. |
Maintaining telemedicine utilization has become and remains critical to providing necessary access to care. Expanding access to behavioral health and mental wellness services is also a priority for many public health officials. The Company’s School Services and Telepractice offerings are well-positioned to provide solutions in these priority areas, as the market opportunity for these services is expected to continue to grow.
As of January 3, 2026, the Company assigned approximately 3,825 specialty healthcare services personnel to its customers.
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ITEM 1. BUSINESS (CONTINUED)
Engineering
RCM provides a full range of Engineering services, including Project Management Engineering, Integrated Design Engineering, Transmission & Distribution Power Delivery, Engineering Analysis, Engineering-Procurement-Construction, Configuration Management, Hardware/Software Validation & Verification, Quality Assurance, Technical Writing & Publications, Manufacturing Process Planning & Improvement, and 3D/BIM Integrated Design. Engineering services are provided at the site of the client or at the Company’s own facilities.
The Company’s Engineering segment consists of three business units – Energy Services, Aerospace Services and Process & Industrial Services.
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Energy Services: Provides solutions to the utility industry, including power generation and transmission and distribution. The group has highly technical project experience that encompasses multi-disciplined engineering and design services as well as providing technical support during design, construction and substation operational phases. The Company believes that the deregulation of the utilities industry, the aging of nuclear power plants, and increased demand for renewable energy offers the Company an opportunity to capture a greater share of professional services and project management requirements of the utilities industry. Electric utilities have prioritized transitioning their power generation assets to cleaner sources of energy and grid modernization initiatives. This expansion requires large-scale investment in the nation’s transmission infrastructure to interconnect these renewable resources to the energy grid. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Aerospace Services: Provides engineering and technical services to the aerospace & defense industry. According to the Congressional Budget Office (“CBO”), the Department of Defense plans to spend over $1 trillion in procurement-related aviation expenditures over the next three decades. Given RCM’s customer account relationships with several of the largest defense prime contractors, the Company believes there is ample opportunity for engineering services and technical publication work, including production and procurement engineering services, as well as sustainment and development program publication services, data management, and digital solutions. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Process & Industrial Services: Provides engineering services to the industrial, chemical, commercial, and oil and gas industries in the United States, Europe, and Canada. With many chemical companies in the U.S. reprioritizing spending toward decarbonization technologies, they are expected to place an emphasis on renewable feedstocks and new carbon-recycling technologies. The Company believes its process engineering services and specialized hydrogen capabilities can play a vital role across this multibillion-dollar opportunity. |
The Company provides its engineering services through several multi-disciplinary delivery methods. These include managed tasks and resources, complete project services, outsourcing, both on and off-site, and a full complement of resourcing alternatives.
As of January 3, 2026, the Company assigned approximately 495 engineering and technical personnel to its customers.
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ITEM 1. BUSINESS (CONTINUED)
Life Sciences, Data and Solutions
The Company’s Life Sciences, Data and Solutions segment is an integrated group of business units providing comprehensive solutions through Managed Services, Project, and On-Demand Staffing Support delivery models. With physical locations in the United States, Canada, Puerto Rico, and the Philippines, our LS&D segment provides solutions on a global scale in the areas of Financial, Human Capital Management, Technical, Manufacturing, Commercialization, Data Warehouse, and Distribution. Specialized project solutions include, but are not limited to, the following areas:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Life Sciences: Specializes in providing innovative solutions to pharmaceutical, medical device, and biotechnology companies in technology deployment, strategy, guidance, quality control, and compliance. The group assists in staffing, solution planning, and remediation needs in automation, compliance, data analytics, technical quality assurance and management, and validation and verification. LS&D is helping pharmaceutical and medical device companies integrate AI into their operations to drive innovation, improve efficiency, and enhance patient outcomes. Besides using AI to identify potential drug candidates, predict molecular interactions, and optimize clinical trial designs. RCM is using AI-powered tools to help streamline the regulatory approval process by analyzing patterns in regulatory data and improving submission accuracy. The role of AI in pharmaceutical and medical device industries is poised to grow even further. Using advanced machine learning algorithms, LS&D continues to refine how we can address treatments for complex diseases. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Data & Solutions and IT Services: Global provider of business and technology solutions designed to improve the operational performance of our clients. Specialties include software development, infrastructure services, data management, human capital management, and managed IT solutions. The Company has a 40-year history of providing qualified IT candidates to customers in a timely and cost-effective manner to address their specific business needs. The Company offers scalable solutions that can provide emerging growth companies with a single qualified resource or an entire project team along with RCM’s project management oversight to Fortune 100 clients. RCM’s data solutions group is leading the way for pharmaceutical companies to transform how data is employed through AI tools. Through AI-driven predictive analytics, we have seen improved drug development timelines, eased regulatory hurdle achievement, and improved quality. |
RCM’s sector knowledge coupled with technical and business process experience enables the Company to provide strategic planning, project execution and management and support services throughout the entire project life cycle. RCM has successfully completed multimillion-dollar projects in a variety of industry verticals using time-tested methodologies that manage strict budgets, timelines and quality metrics.
The Company believes that its ability to deliver life sciences, data and solutions across a wide range of technical platforms provides an important competitive advantage. RCM ensures that its consultants have the expertise and skills needed to keep pace with rapidly evolving information technologies. The Company’s strategy is to maintain expertise and acquire knowledge in multiple technologies so it can offer its clients non-biased technology solutions best suited to their business needs.
The Company provides its life sciences, data and solutions through several flexible delivery methods. These include management consulting engagements, project management of client efforts, business process outsourcing, project implementation of client initiatives, recruiting process outsourcing, both on and off site, and a full complement of human capital management solutions and resourcing alternatives.
As of January 3, 2026, the Company assigned approximately 225 Life Sciences, Data, and Solutions personnel to its customers.
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ITEM 1. BUSINESS (CONTINUED)
Branch Offices
The Company’s organization consists of 26 branch offices located in the United States, Canada, Germany, Philippines, Puerto Rico and Serbia. The locations and services of each of the branch offices are set forth in the table below.
| LOCATION | NUMBER OF OFFICES | SERVICES PROVIDED(1) |
|---|---|---|
| United States | ||
| Alabama | 1 | HC |
| Arizona | 1 | HC |
| California | 2 | HC |
| Connecticut | 1 | E |
| Florida | 2 | HC, E |
| Hawaii | 1 | HC |
| Illinois | 1 | HC |
| Massachusetts | 1 | HC |
| New Jersey | 2 | E, LS&D |
| New York | 3 | E, HC |
| Rhode Island | 1 | E |
| Tennessee | 1 | HC |
| Texas | 1 | HC |
| 18 | ||
| Canada | 1 | E |
| Germany | 1 | E |
| Netherlands | 1 | E |
| Philippines | 1 | HC, E, LS&D |
| Puerto Rico | 1 | E, LS&D |
| Serbia | 3 | E, LS&D |
| (1) Services provided are abbreviated as follows: | |
|---|---|
| E | - Engineering |
| HC | - Specialty Health Care |
| LS&D | - Life Sciences, Data and Solutions |
The Company is headquartered in the United States, and its segments operate in the United States, Canada, Germany, the Netherlands, the Philippines, Puerto Rico, and Serbia.
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ITEM 1. BUSINESS (CONTINUED)
International Operations
The Company operates its international business in Canada, Germany, Philippines, Puerto Rico and Serbia. For the fiscal year ended January 3, 2026, approximately 9.1% of the Company’s revenue was generated outside the United States. There are certain risks inherent in conducting business internationally including: the imposition of trade barriers, the enactment of tariffs, foreign exchange restrictions, longer payment cycles, greater difficulties in accounts receivable collection, difficulties in complying with a variety of foreign laws (including without limitation the U.S. Foreign Corrupt Practices Act), changes in legal or regulatory requirements, including as to laws and regulations governing economic and trade sanctions, difficulties in staffing and managing foreign operations, complex and uncertain employment environments, political instability and potentially adverse tax consequences. Our operations in Serbia could be adversely affected by the current conflict between Ukraine and Russia, with which Serbia has substantial ties. Should sanctions against Russia affect Russia in a way that causes adverse economic consequences to Serbia, or if such sanctions were to be extended to countries that might be considered to be in alignment with Russia, thus could have a negative impact on our employees or operations both within and outside Serbia. To the extent the Company experiences these risks, the business and results of operations could be adversely affected.
From its headquarters locations in New Jersey, the Company provides its branch offices with centralized administrative, marketing, finance, MIS, human resources and legal support. Centralized administrative functions and shared services minimize the administrative burdens on branch office managers and allow them to spend more time focusing on sales and marketing, client relations and practice development activities.
Branch offices are primarily located in markets that the Company believes have strong growth prospects for the Company’s services. The Company’s branches are operated in a decentralized, entrepreneurial manner with most offices operating as independent profit centers.
Sales and Marketing
Sales and marketing efforts are conducted at the local and national level through the Company’s network of branch offices. Business development and sales activities and productivity are tracked and rankings established and published. Sales between business units are recognized and financially encouraged. The Company emphasizes long-term relationships and partnerships with customers that are developed through regular assessment of customer requirements and proactive monitoring of service performance. The Company’s sales and account management personnel make regular visits to existing and prospective customers. New customers are obtained through active sales programs and referrals. The Company encourages its employees to participate in and support national and regional trade associations, economic development agencies, local chambers of commerce and other civic associations. The Company seeks to develop strategic partnering relationships with its customers by providing comprehensive solutions for all aspects of a customer’s operations, engineering, life sciences, information technology and other professional services needs. The Company concentrates on providing carefully screened professionals with a range of highly specialized and technical skills in a timely manner and at competitive prices. The Company regularly monitors the quality of the services provided by its personnel and obtains feedback from its customers as to their satisfaction with the services provided.
The Company serves Fortune 1000 companies and many middle market clients, competing on a national and global scale. The Company’s relationships with these customers are typically formed at the customers’ local or regional level and from time to time, when appropriate, at the corporate level for national accounts.
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ITEM 1. BUSINESS (CONTINUED)
Key Customers
The Company has established long-term relationships with many of its customers across each of its business segments. The Company’s emphasis on client retention has resulted in repeat business from many of its largest strategic accounts. During the fiscal year ended January 3, 2026, the Company had two customers exceed 10% of consolidated revenue, representing 20.8% and 13.6% of consolidated revenue. The Company’s five, ten and twenty largest customers accounted for approximately 51.0%, 64.9% and 75.0%, respectively, of the Company’s revenue for the fiscal year ended January 3, 2026.
Other Information
Safeguards - Business, Disaster and Contingency Planning
The Company has implemented several safeguards to protect the Company from various system-related risks, including Redundant Telecommunications and server systems architecture, multi-tiered server and desktop backup infrastructure, and data center physical and environmental controls. In addition, the Company has developed disaster recovery/business continuity procedures for all offices.
Given the significant amount of data generated in the Company’s key processes, including recruiting, sales, payroll, and customer invoicing, the Company has established redundant procedures that function daily within the Company’s primary data center, a third-party Internet Data Center (IDC). This redundancy should mitigate risks of hardware, application, and data loss by using live differential backups of servers and desktops to Storage Area Network (SAN) devices on its backup LAN, culminating in off-site tape storage at an independent facility. Controls within the data center environment ensure that all systems are proactively monitored and data is properly archived.
Additionally, the Company has contracted and brokered strategic relationships with third-party vendors to meet its recovery objectives in the event of system disruption. For example, comprehensive service-level agreements for the Company’s data circuits and network devices guarantee minimal outages, as well as network redundancy and scalability.
The Company’s ability to protect its data assets from damage caused by fire, power outages, telecommunications failures, and facility breaches is critical. To address potential cybersecurity threats, the Company uses a third-party mail management service to filter all emails destined for the RCMT domain before being delivered to the corporate mail servers. The service has also been deployed to safeguard the enterprise from malicious internet content. The deployment of virus, spam, and patch management controls extends from the perimeter network to all desktops and is centrally monitored and managed. In addition to virus and malware controls, an Intrusion Protection System (IPS) monitors and alerts on changes in network traffic patterns and known malicious signatures.
The Company maintains a disaster recovery plan that outlines recovery time/point objectives (RTO/RPO), the organization structure, roles, and procedures, including site-specific disaster plans for all of its key operating offices. Corporate IT personnel regulate the maintenance and integrity of backed-up data throughout the Company.
The IDC provides the Company with a robust data center environment, including redundant HVAC, commercial power feeds, ten 2000kW diesel generator sets, and five 10,000-gallon above-ground fuel oil storage tanks to provide standby power and dry-pipe fire suppression. In addition, the IDC provides 24/7 security staffing, closed-circuit monitors, secure-card key access, biometrics scanners, mantraps, and alarmed doors.
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ITEM 1. BUSINESS (CONTINUED)
Competition
The market for Healthcare, Engineering and Life Sciences, Data and Solutions is highly competitive and is subject to rapid change. As market demand has shifted, many software companies have adopted strategies to pursue services and consulting offerings, making them direct competitors when, in the past, they may have been alliance partners. Primary competitors include participants from a variety of market segments, including publicly and privately held firms, systems consulting and implementation firms, application software firms, service groups of computer equipment companies, facilities management companies, general management consulting firms, and staffing companies. In addition, the Company competes with its clients’ internal resources, particularly where these resources represent a fixed cost for the client. Such competition may impose additional pricing pressures on the Company.
The Company believes its principal competitive advantages in the healthcare, engineering and life sciences, data and solutions market include: strong relationships with existing clients, a long-term track record with over 1,000 clients, a broad range of services, technical expertise, knowledge and experience in multiple industry sectors, quality and flexibility of service, responsiveness to client needs and speed in delivering life sciences, data and solutions.
Additionally, the Company competes for suitable acquisition candidates based on its differentiated acquisition model, its entrepreneurial and decentralized operating philosophy, and its strong corporate-level support and resources.
Seasonality
The Company’s operating results can be affected by the seasonal fluctuations in client expenditures. Expenditures in the Engineering and Life Sciences and Data and Solutions segments can be negatively affected during the first quarter of the year, when clients are finalizing their budgets. Quarterly results generally fluctuate depending on, among other things, the number of billing days in a quarter and the seasonality of clients’ businesses. The business is also affected by holiday and seasonal vacation timing, generally resulting in lower revenue and gross profit in the fourth quarter of each year, even after accounting for non-seasonal factors. Extreme weather conditions may also affect demand in the first and fourth quarters of the year as certain clients’ facilities are in geographic areas subject to closure or reduced hours due to inclement weather. The Company generally experiences an increase in its cost of sales and a corresponding decrease in gross profit and the gross margin percentage in the first and second fiscal quarters of each year due to the resetting of certain state and federal employment tax rates and related salary limitations. Also, the Company’s Specialty Health Care segment typically experiences a significant decline in revenue due to the substantial closure of one of its largest customers, the New York City Department of Education, and other educational institution clients during the third quarter, as these clients observe summer recess.
Government Regulations
The Company is a consulting firm and employment service provider and is generally subject to one or more of the following types of government regulation: (1) regulation of the employer/employee relationship between a firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers’ compensation, (2) registration, licensing, record keeping and reporting requirements, and (3) federal contractor compliance. The Company believes it is in material compliance with all employee-related statutes.
Intellectual Property
Management believes the RCM Technologies, Inc.’s name is extremely valuable and important to its business. The Company endeavors to protect its intellectual property rights and to maintain certain trademarks, trade names, service marks, and other intellectual property rights, including The Source of Smart Solutions® and Industries of Tomorrow, Today™, for which a trademark application has been submitted. The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the Company’s use of its proprietary rights.
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ITEM 1. BUSINESS (CONTINUED)
Human Capital
Our employees and contractors (together, our "workforce") are the Company's most valuable resources for current and future success. We promote an environment that ensures safety, encourages diversity and inclusion, fosters growth and self-development, and provides meaningful work. All employees contribute to our success through attractive, aligned rewards. Notable programs we offer to our full-time employees include:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Compensation packages that are market competitive, considering the location and responsibilities of the role; |
| ● | The majority of full-time, salaried employees are eligible for incentive-based compensation such as performance bonuses and commissions; | |
|---|---|---|
| ● | High-quality employer-sponsored health insurance; | |
| ● | Access to numerous other employer-sponsored and employee-sponsored benefit plans; | |
| ● | Employer 401(k) matching contributions; | |
| ● | Employee stock purchase plan (at least a 15% discount to market value at the time of purchase) |
Our recruiting teams use internal and external resources to recruit highly skilled and talented workers, and we encourage and reward workforce referrals for open positions.
In addition to our comprehensive investment in our workforce success, we strive to maintain an inclusive environment that values and leverages the uniqueness of each person to the benefit of all our stakeholders. We view the combination of diverse perspectives and backgrounds as a powerful force for innovation. To promote diversity and our core principles, we emphasize dignity, value, and the equality of all members, regardless of race, color, religion, age, gender, or sexual orientation, through our actions and workplace training programs. We continually strive to harness the diversity of our global workforce by cultivating a climate that permits all of our workforce to bring their authentic selves to work every day.
The health and safety of our workforce are also a top priority. We have implemented appropriate procedures and precautions to ensure the continued safety and well-being of our workforce. We strive to comply with all federal and local workplace laws and regulations where we do business. We are always looking for ways to exceed compliance standards by applying continuous improvement discipline to proactively eliminate workplace risks.
The Company believes promoting engagement and empowering its workforce drives better business results. As a result, the Company believes it has an "open door" culture in which every member of its workforce is comfortable expressing ideas for improving the Company and its performance. Our culture has led to action plans at all levels of the organization and drives continuous conversations about the things that matter most to our workforce and their teams.
The Company's employees and contractors are generally divided into four groups: 1) Nonbillable employees; 2) Billable salaried employees; 3) Billable hourly long-term employees; 4) Billable hourly short-term employees and contractors.
Nonbillable employees are primarily full-time and salaried. These positions include, but are not limited to, executives, managers, general administration, finance, accounting, account managers, recruiters, credentialers, etc. These employees are not billed to clients. As of January 3, 2026, the Company employed approximately 385 nonbillable employees. The expense for these employees is included in the Company's selling, general, and administrative expenses in its income statements.
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ITEM 1. BUSINESS (CONTINUED)
Billable salaried employees primarily include senior-level employees whose time is often billed to clients. These employees tend to be long-term in nature. Many are intended to produce high utilization rates (representing the percentage of their time billed to clients), often in the 90% to 100% range. However, some have nonbillable responsibilities such as account management, client proposal preparation, general strategy formulation, expert content generation, project controls, overseeing projects where their time is not billable, supervising billable personnel, etcetera. These employees' utilization rates generally range from 20% to 90%. Most of the expense for billable salaried employees are included in the Company's direct costs in its income statements.
Billable hourly long-term employees have very high utilization, typically in the 90% to 100% range. For most of these employees, our goal is near 100% utilization. They are hired with the idea that we want them to work on multiple assignments, either in succession or simultaneously. Billable hourly short-term employees have nearly 100% utilization. They are typically hired for one assignment, and upon completion, they terminate.
As of January 3, 2026, our billable workforce comprised approximately 3,825 Specialty Health Care services personnel, 495 Engineering and Technical personnel, and 225 Life Sciences, Data and Solutions personnel assigned by the Company to work on client projects or assignments for various periods. None of the Company's employees are party to a collective bargaining agreement.
The Company conducts business globally but is principally concentrated in North America, Europe and the Philippines. As of January 3, 2026, the Company's workforce breaks out as follows:
| ● | United States and Puerto Rico: approximately 225 nonbillable and 4,370 billable | |
|---|---|---|
| ● | International (Canada, Europe and the Philippines): approximately 160 nonbillable and 175 billable |
Access to Company Information
The Company is a Nevada corporation organized in 1971. The address of its principal executive office is 2500 McClellan Avenue, Suite 350, Pennsauken, NJ 08109-4613.
The Company electronically files its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxies, information statements, and other information regarding issuers that file electronically.
The Company makes available on its website or by responding free of charge to requests addressed to the Company’s Corporate Secretary, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed by the Company with the SEC pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended. These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The Company’s website is http://www.rcmt.com. The information contained on the Company’s website, or on other websites linked to the Company’s website, is not part of this document. Reference herein to the Company’s website is an inactive text reference only.
The Company has adopted a Code of Conduct applicable to all its directors, officers and employees. In addition, the Company has adopted a Code of Ethics, within the meaning of applicable SEC rules, applicable to its Chief Executive Officer, Chief Financial Officer and Controller. Both the Code of Conduct and Code of Ethics are available, free of charge, by sending a written request to the Company’s Corporate Secretary. If the Company makes any amendments to either of these Codes (other than technical, administrative, or other non-substantive amendments), or waives (explicitly or implicitly) any provision of the Code of Ethics to the benefit of its Chief Executive Officer, Chief Financial Officer or Controller, it intends to disclose the nature of the amendment or waiver, its effective date and to whom it applies in the investor relations portion of the website, or in a report on Form 8-K filed with the SEC.