Breaking Down National Research Corporation (NRC) Financial Health: Key Insights for Investors

You're looking at National Research Corporation (NRC) and seeing a mixed signal: a market leader in healthcare experience solutions with a long profitability streak, but also some near-term financial headwinds you can't ignore. For the third quarter of fiscal year 2025, the company reported revenue of $34.6 million, which was a slight dip year-over-year, and GAAP net income fell to $4.1 million, a 27.5% decrease from the prior year, mostly due to higher interest and tax costs. Still, the underlying business health looks surprisingly strong, with Total Recurring Contract Value (TRCV)-a solid forward-looking metric-surging 8% year-over-year to $141.7 million, plus cash flow from operations saw a massive 46% jump to $13.8 million. This tells me the core subscription model is resilient, but the bottom line is getting squeezed by external factors and internal investment. We need to figure out if that $0.16 per share dividend, which they just increased by 33%, is sustainable, or if management is signaling confidence that the market is defintely missing.

Revenue Analysis

You're looking for clarity on National Research Corporation (NRC) revenue, and the picture for the 2025 fiscal year is defintely a mixed one. The direct takeaway is this: while the trailing twelve months (TTM) revenue has dipped slightly, the company's forward-looking Total Recurring Contract Value (TRCV) is showing its strongest growth in years. This suggests a turnaround is building momentum.

For the quarter ending September 30, 2025 (Q3 2025), National Research Corporation reported total revenue of $34.6 million, which was a 2% increase sequentially from the previous quarter. Still, the TTM revenue-a broader view of the last year-stood at $139.10 million, marking a year-over-year decline of -3.51%. That's the near-term headwind you need to watch.

Primary Revenue Streams and the Subscription Core

National Research Corporation operates a classic subscription business model, providing healthcare experience improvement solutions, which are essentially analytics and insights for patient and employee experiences. This is not a transactional business; it's all about long-term contracts. The main revenue source is the recurring revenue from these contracts, primarily generated in the United States and Canada.

The most important leading indicator of future revenue is the Total Recurring Contract Value (TRCV), which is the annualized value of all recurring contracts. This is your clear opportunity signal. As of Q3 2025, the TRCV hit a strong $141.7 million, representing an 8% year-over-year increase. That's the strongest TRCV growth National Research Corporation has seen since 2020. This metric is what really matters for a subscription-based company.

Here's the quick math on the recent performance:

• Q3 2025 Revenue: $34.6 million
• TTM Revenue (as of Q3 2025): $139.10 million
• TRCV (as of Q3 2025): $141.7 million

Analysis of Revenue Changes and Growth Drivers

The -3.51% TTM revenue decline tells you that the company faced challenges with existing clients earlier in the year, specifically a $1.3 million reduction in recurring revenue from them in Q2 2025. But, the recent 8% TRCV growth shows the sales strategy is working to overcome this. The growth is fueled by three clear actions:

• New Logos: Securing new client wins, including a new logo exceeding $500,000 in TRCV with an East Coast health system.
• Cross-Sell/Upsell: Deepening relationships with existing customers, including two nearly $1 million cross-sells with top 100 health systems.
• Retention: Significantly improving gross dollar retention, which has helped reduce TRCV losses and down sells by nearly 50%.

This is a pivot in action, moving from a slight revenue contraction to strong contract growth. You can see more details on the capital structure supporting this in Exploring National Research Corporation (NRC) Investor Profile: Who's Buying and Why?

To be fair, the Q3 revenue growth was only 2% sequentially, so the strong TRCV needs time to fully translate into reported revenue. The lag between securing a contract and recognizing the revenue is real. Still, the momentum in new business bookings is undeniable. The company's focus on its core healthcare market, providing data-centric solutions, is clearly resonating with large health systems.

Here is a snapshot of the key revenue indicators:

What this estimate hides is the potential for Q4 operating expenses to rise, as some compensation and marketing costs that were lower in Q3 are expected to return. That could pressure near-term profitability, even with solid revenue growth.

Next Step: Finance: Model Q4 revenue projections using the $141.7 million TRCV as the base, factoring in a 2% sequential growth rate and the expected Q4 expense increase by Friday.

Profitability Metrics

You need to know if National Research Corporation (NRC) is a high-margin business, and the answer is a clear yes. Their software-as-a-service (SaaS) model delivers significantly higher margins than the hospital systems and payers they serve, but you must watch the underlying trends in operational efficiency.

The company's most recent results for the third quarter of 2025 show a strong rebound in profitability, driven by cost management and a focus on recurring revenue. This is a classic high-margin tech play operating in a low-margin industry.

Gross, Operating, and Net Profit Margins

NRC's profitability is exceptional, particularly when you consider the tight margins of the healthcare providers they sell to. While the precise Q3 2025 Gross Profit margin is not explicitly stated in the most recent release, the business model suggests a high figure, likely north of 60%, which is typical for a data and analytics company selling subscriptions. The real story is in the conversion of that high gross profit down the income statement.

Here's the quick math on the key Q3 2025 margins based on $34.6 million in revenue:

• Operating Margin: Their GAAP Operating Margin was approximately 22.36% ($7.7 million Operating Income on $34.6 million Revenue).
• Net Profit Margin: The GAAP Net Profit Margin was 12% (or $4.1 million in net income).
• Adjusted Net Profit Margin: The Adjusted Net Profit Margin was even stronger at 14% (or $5.0 million), reflecting a clearer picture of core business performance.

Trends in Operational Efficiency

The trend analysis is mixed, and it's where you need to focus. On one hand, the Q3 2025 Adjusted EBITDA Margin expanded to 31%, which is a gain of roughly 4 percentage points from the prior year's third quarter. That's a great sign of cost efficiencies taking hold under the new leadership. Cash flow from operations also surged by 46% year-over-year to $13.8 million, showing strong cash generation from the business. That's a defintely positive signal.

However, the longer-term view shows a headwind: the operating margin has been in a 5-year decline, averaging a drop of -5.9% per year as of September 2025. [cite: 9, from previous step] This indicates that while the most recent quarter was a strong rebound, the management team, led by CEO Trent Green, still has to reverse a multi-year trend of rising operating expenses relative to revenue. The Q2 2025 results, which showed a net loss of $(106,000) and a temporary operating margin dip to 5%, highlight the volatility that can occur when cost management slips.

Comparison with Industry Averages

NRC's profitability ratios stand out dramatically against its primary customer base-the US healthcare system. This is the core of the investment thesis. You are investing in the data layer, not the service layer.

NRC's 12% GAAP Net Profit Margin and 22.36% Operating Margin for Q3 2025 are in a different league than the median US hospital, which reported a thin year-to-date operating margin of just 1.1% through September 2025. [cite: 14, from previous step] Health insurers, another major customer type, averaged a 5.3% profit margin in Q1 2025. [cite: 16, from previous step] NRC's high margins demonstrate the value of their data and analytics solutions (Healthcare Experience Improvement Solutions) in an industry desperate for efficiency. Exploring National Research Corporation (NRC) Investor Profile: Who's Buying and Why?

The margin differential is a key competitive advantage. It shows NRC has pricing power because their data is critical to their customers' survival in a low-margin environment.

Debt vs. Equity Structure

You're looking at National Research Corporation (NRC)'s balance sheet and seeing a capital structure that raises a clear question: How much risk is too much? The direct takeaway is that National Research Corporation is heavily leveraged, with a Debt-to-Equity (D/E) ratio that is orders of magnitude higher than its industry peers, an aggressive strategy largely driven by funding shareholder payouts with borrowed money.

As of the third quarter of 2025, National Research Corporation carries approximately $80.0 million in total debt against a relatively small shareholder equity base of about $14.3 million. This is a significant shift from the capital-light model typically seen in the technology and services sectors. The debt itself is overwhelmingly long-term, which is common for stable businesses, but the sheer volume is the issue.

• Total Debt (Q3 2025): $80.0 million
• Current Debt Portion: $4.01 million
• Long-Term Debt (Inferred): $75.99 million

Here's the quick math on the leverage: The company's Debt-to-Equity ratio sits at a staggering 559.2%, or 5.59:1. This means for every dollar of shareholder capital, the company has taken on over five dollars in debt. To be fair, a high ratio doesn't always signal immediate doom, but context matters immensely.

When you stack that 5.59:1 ratio against industry norms, the risk profile becomes clear. For a company in the broader Healthcare and Information Technology space, a healthy D/E ratio is typically below 1.0. For instance, the average for Healthcare companies is around 0.84, and for Technology companies, it's closer to 0.48. Honestly, a ratio above 2.5 is generally viewed as high-risk by analysts. National Research Corporation's ratio is defintely an outlier, suggesting an extremely aggressive use of financial leverage.

The balance between debt financing and equity funding at National Research Corporation has been heavily tilted toward debt, especially to manage capital allocation to shareholders. The company has explicitly used debt to fund its aggressive capital return program, a strategy that boosts short-term returns but erodes the equity base. This is a crucial point for investors to understand. In Q3 2025, the Board declared an increased quarterly cash dividend of $0.16 per share, a 33% increase from the prior quarter, which continues this trend of returning capital via debt. This is a high-risk, high-reward approach: it amplifies earnings per share (EPS) when the business is performing, but it also magnifies losses and default risk if cash flow tightens. You can find more details on this strategy in Breaking Down National Research Corporation (NRC) Financial Health: Key Insights for Investors.

The action item here is to monitor the interest coverage ratio, which is the company's ability to service this debt. National Research Corporation's interest payments are currently well covered by its earnings before interest and taxes (EBIT) at 6.9x coverage, but that comfort level can drop fast if earnings contract further. Finance: Model a stress-test scenario where EBIT drops by 25% to see the impact on debt serviceability.

Liquidity and Solvency

You're looking at National Research Corporation (NRC)'s ability to cover its short-term bills, and the simple truth is the balance sheet shows a tight liquidity position, but the cash flow statement offers a significant counterpoint.

The company's near-term liquidity ratios are defintely a red flag on paper. As of the most recent quarter (MRQ) in 2025, National Research Corporation's Current Ratio sits at just 0.53. This means for every dollar of current liabilities (debts due within a year), the company only has 53 cents in current assets to cover it. The Quick Ratio (or Acid-Test Ratio), which strips out less-liquid assets like prepaid expenses, is even lower at 0.39. That's a serious indicator of Exploring National Research Corporation (NRC) Investor Profile: Who's Buying and Why? short-term structural risk.

Here's the quick math on working capital (Current Assets minus Current Liabilities):

• Current Assets (Q3 2025): $20.4 million
• Current Liabilities (Short-Term Liabilities): $38.6 million
• Working Capital: -$18.2 million

The cash flow statement is where the real strength of National Research Corporation lies, and it's what keeps the lights on despite the low ratios. Over the trailing twelve months (TTM) leading up to the end of 2025, the company generated $25.65 million in Cash from Operations. That is a strong, positive flow of cash from their core business activities.

The other cash flow movements show a company that is actively reinvesting and managing its capital structure:

• Operating Cash Flow (TTM): $25.65 million - Strong core business generation.
• Investing Cash Flow (TTM): -$14.03 million - Net outflow, indicating investment in long-term assets.
• Financing Cash Flow (TTM): This is often negative due to dividend payments and share repurchases, which is typical for a mature, profitable company.

Valuation Analysis

You're looking at National Research Corporation (NRC) and wondering if the price you see today is a fair deal, and honestly, the valuation metrics paint a mixed, but telling, picture. Based on the latest fiscal year data from November 2025, the stock is trading at a premium on some metrics, which suggests the market is pricing in future growth despite recent revenue declines.

The core question of whether National Research Corporation is overvalued or undervalued hinges on comparing its key valuation ratios to its peers and its own historical averages. Here's the quick math on the trailing twelve months (TTM) data:

• Price-to-Earnings (P/E) Ratio: 21.73
• Price-to-Book (P/B) Ratio: 24.42
• Enterprise Value-to-EBITDA (EV/EBITDA): 12.39

A P/E of 21.73 is certainly not cheap, especially when the company is facing a revenue growth decline of 3.40%. The P/B of 24.42 is exceptionally high, which is typical for a capital-light, software-driven business model like National Research Corporation's, but it still signals a rich valuation relative to its book value. The EV/EBITDA of 12.39 is more reasonable, suggesting that when you factor in debt and cash to get to the Enterprise Value, the operating earnings (EBITDA) support a less aggressive multiple. Honestly, the P/B ratio is a defintely a flag to dig deeper into its asset base.

Decoding Recent Stock Price Action

The stock price trend over the last 12 months shows significant volatility, which can create both risk and opportunity for you. As of November 2025, the stock is trading around the $15.23 to $16.05 range. You have to remember the 52-week high was $20.11 and the 52-week low was a sharp drop to $9.76 (or $9.755) in April 2025.

What this tells us is that investor sentiment has been highly volatile. The stock is down about 24.25% over the last 12 months but has seen a strong rebound, climbing 34.41% just in the past month. This recent surge could be a reaction to the strong Q3 2025 results, where the company announced a 30% adjusted EBITDA margin and repurchased 382,000 shares. The price has risen in 8 of the last 10 days, showing a strong short-term upward momentum.

Dividend Health and Analyst Views

For income-focused investors, National Research Corporation offers a solid dividend, but you need to be aware of the mixed signals on its future direction. The dividend yield is approximately 3.37%. The payout ratio, which shows the percentage of earnings distributed as dividends, stands at about 67.61%. This level is sustainable, as it leaves enough cash for reinvestment, but it's a significant portion of earnings.

When it comes to Wall Street consensus, the picture is murky. National Research Corporation is a smaller-cap, niche player in healthcare analytics, so it doesn't get the broad analyst coverage of a mega-cap like BlackRock. Some sources indicate a lack of formal analyst ratings, which can sometimes lead to an undiscovered opportunity for individual investors. However, other analysis points to a 'Sell' rating due to forecasts of declining performance or overvaluation, while other AI-driven models suggest a 'Buy or Hold' candidate. This lack of consensus means you need to trust your own research even more. Exploring National Research Corporation (NRC) Investor Profile: Who's Buying and Why?

Here is a summary of the key dividend and analyst data:

Next Step: Conduct a discounted cash flow (DCF) analysis using a conservative revenue growth rate of -3.40% for the near term to see if the current price of around $16.05 is justified by future free cash flow.

Risk Factors

You need to understand that while National Research Corporation (NRC) shows strong operational durability-a 20-year streak of quarterly profitability is defintely a testament to that-near-term financial performance is under pressure from specific internal and external factors. The core risk is a slowdown in revenue from existing clients, which is getting squeezed by rising costs and a tough regulatory environment.

Here's the quick math on the near-term financial squeeze: Q3 2025 saw GAAP net income drop 27.5% to $4.1 million, even though revenue was only down 3.4% to $34.6 million year-over-year. This disparity points directly to operational and financial risks that are eating into the bottom line, despite a solid 8% year-over-year increase in Total Recurring Contract Value (TRCV) to $141.7 million.

Operational and Financial Risks

The biggest internal risks are cost-related. The Q3 net income decline was largely due to two things: higher interest expenses and an elevated effective tax rate. This is a classic financial risk in a rising rate environment, plus, in Q2 2025, the effective tax rate spiked to 118% because of executive compensation deductibility limits, which is a major, though likely non-recurring, hit.

Also, look at the spending: Selling, General, and Administrative (SG&A) expenses surged 58% year-over-year to $17,734,000 in Q2 2025. That kind of spending jump, coupled with a revenue decline, is what pushes operating income down-it fell 82% in Q2 2025 to just $1,588,000. You can't sustain that margin compression.

• Reduced recurring revenue from existing clients.
• Significant rise in SG&A expenses.
• Higher interest expenses impacting net income.

External and Strategic Risks

National Research Corporation (NRC) operates in the healthcare sector, which means it's constantly exposed to external risks like consolidation in the healthcare industry and changes to federal healthcare reform legislation. Consolidation shrinks the number of potential clients and gives the remaining few more leverage on pricing. Plus, the market has relatively few barriers to entry, so increased competition is a constant threat that could lead to pricing pressure and market share loss.

Strategically, the company's reliance on its data platform means technology risks are paramount. The potential for failures in the IT platform, cyber-attacks, or even having their intellectual property copied are all real threats that could immediately disrupt their subscription-based revenue model.

Mitigation and Actionable Insights

Management is clearly aware of these pressures and is taking steps. The jump in Q3 Adjusted EBITDA to $10.9 million (up 11% year-over-year) suggests they are finding some cost efficiencies and improved operational execution to expand margins, which is a positive sign. The new CEO, Trent Green, is focused on strategic revitalization and the company is emphasizing innovation and investment in healthcare analytics.

The strongest mitigation is the growth in TRCV, driven by strong new sales momentum and higher customer retention. This is the long-term buffer against short-term revenue dips.

Here's a snapshot of the risk vs. mitigation in Q3 2025:

The takeaway is simple: the company is profitable and growing its contract base, but you need to watch those operating expenses and the impact of external interest rates. For a deeper dive into who is betting on this turnaround, check out Exploring National Research Corporation (NRC) Investor Profile: Who's Buying and Why?

Next Step: Finance should model a sensitivity analysis on Q4 2025 net income, factoring in a 50 basis point increase in interest expense, to quantify the real impact of that financial risk.

Growth Opportunities

You're looking at National Research Corporation (NRC) and wondering if the recent financial momentum is sustainable. The direct takeaway is yes, the company is positioned for near-term growth, but it's not a high-velocity story; it's a steady, margin-expanding one, driven by a crucial shift to AI-enabled solutions and better customer retention.

The Total Recurring Contract Value (TRCV), which is a key leading indicator for subscription revenue over the next year, hit $141.7 million in Q3 2025, an 8% increase year-over-year. That's the strongest TRCV growth National Research Corporation has seen since 2020. This tells you the sales engine is defintely working, and more importantly, customers are sticking around.

Product Innovation and Sales Momentum

The primary growth drivers aren't just market tailwinds; they are specific, internal execution wins. The company is successfully executing a cross-sell and upsell strategy, which drove the net retention rate to its highest level since 2020. For example, Q3 2025 saw multiple competitive takeaways, including a deal with a top-50 health system resulting in a >$1 million TRCV expansion. Here's the quick math: you get a higher-margin revenue stream when you sell more to an existing client than when you acquire a new one.

The product innovation focus is squarely on modernizing the technology platform to support AI-driven innovations. This is critical in the healthcare analytics space, where efficiency and predictive power matter most. NRC Health is leveraging AI to create a more natural way to collect, analyze, and deliver patient and employee feedback, which is their core business.

• AI-driven products: Accelerate feedback analysis and service recovery.
• Strong sales momentum: Best quarterly cross-sell/upsell activity in six years.
• Customer retention: TRCV losses/downsells reduced nearly 50%.

Strategic Focus and Earnings Estimates

While specific full-year 2025 revenue projections from analysts are scarce, the Q3 2025 results provide a clear picture of profitability and momentum. Revenue for the quarter was $34.6 million. More impressively, Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $10.9 million, representing a 31% margin. That's an 11% year-over-year growth in Adjusted EBITDA, showing that they are not just growing revenue, but also improving their operating efficiency.

The strategic initiatives are clear and actionable: deepen client partnerships, evolve the go-to-market model, and modernize the tech platform. Recent partnerships, like the one with BJC HealthCare in November 2025, show they are still actively winning major health system contracts. Plus, they are returning capital to shareholders, repurchasing 618,000 shares for $9.3 million in Q3 2025 and increasing the quarterly dividend by 33% to $0.16 per share.

Competitive Moat and Differentiation

National Research Corporation's competitive advantage (or moat) is its deep entrenchment in the healthcare sector, which is hard to replicate. They have over 40 years dedicated solely to improving patient and employee experience, what they call Human Understanding®. This focus gives them subject matter expertise that a generalist tech firm can't match.

They also operate the longest syndicated healthcare consumer study in the nation, giving them a massive, proprietary dataset-a real asset in the age of AI. This is why they keep winning industry validation, including the Best in KLAS 2025 Award for Healthcare Experience Management. They are a proven incumbent in a specialized, high-stakes market. To be fair, the healthcare market is still facing financial pressures, which could limit the pace of new spending. Still, their focus on solutions that drive measurable improvements in patient and employee experiences makes them a necessary partner, not a discretionary expense.

Next Step: Review the full Q3 2025 earnings transcript for color on the AI product roadmap and expected deployment timelines. You can find more details in our full analysis: Breaking Down National Research Corporation (NRC) Financial Health: Key Insights for Investors.