Breaking Down Insperity, Inc. (NSP) Financial Health: Key Insights for Investors

You're looking at Insperity, Inc. (NSP) right now, trying to figure out if the recent volatility is a buy signal or a warning, and honestly, the numbers tell a mixed story you need to unpack before making a move.

The latest Q3 2025 earnings report, released November 4, 2025, showed a clear miss: the company posted an adjusted EPS loss of ($0.20), significantly below the consensus estimate of $0.22, largely due to a materially higher-than-expected healthcare/benefits cost trend, which spiked around 9.1% year-over-year for the quarter. This cost pressure forced a major revision in their full-year 2025 outlook, with adjusted EPS now expected to land between $0.84 and $1.47, a sharp drop from the prior forecast of up to $2.51. That's a defintely tough pill to swallow.

Still, with full-year revenue estimates holding steady around $6.85 billion, the core business isn't collapsing, but the margin compression is real, and it's why analysts have settled on a consensus 'Reduce' rating with an average price target of about $46.67. Plus, the current annualized dividend of $2.40 comes with an unsustainably high payout ratio of 521.74%, so you need to understand the durability of that payout before you chase the yield.

Revenue Analysis

You need to know where the money is coming from to judge Insperity, Inc. (NSP)'s stability, and the picture for 2025 is one of steady, albeit slowing, top-line growth driven by client volume and pricing. The company's revenue is almost entirely generated in the United States and comes from its core Professional Employer Organization (PEO) model, which it brands as Workforce Optimization and Workforce Synchronization solutions. This is not a complex, multi-national revenue stack; it's a focused business model.

For the third quarter of 2025, Insperity, Inc. reported revenue of $1.62 billion, which was a 4.0% increase year-over-year. Honestly, that growth rate is a bit softer than what analysts had hoped for, missing the consensus estimate of $1.63 billion. Still, the trailing twelve months (TTM) revenue ending September 30, 2025, reached $6.76 billion.

The primary revenue driver is simple: the number of employees they manage, which they call worksite employees (WSEEs). Here's the quick math on the Q3 2025 growth:

• Average paid WSEEs increased 1% to 312,842.
• Revenue per WSEE rose 3% due to higher pricing.

The total revenue growth of 4.0% is a direct result of that combined increase in volume and price. It's a solid, predictable engine, but it shows the market is getting tougher to grow in.

What this estimate hides is the strategic shift that will impact future revenue streams. Insperity, Inc. is actively diversifying its offering mix, which is a smart move. The biggest change is the official rollout of HRScale, a strategic joint development with Workday. This new solution is positioned to be a catalyst for future growth, targeting a different segment of the market with a more technology-forward approach. Also, while not a revenue stream change, the new contract with UnitedHealthcare (UHC), extended through 2028, is crucial because it significantly lowers their benefits-related risk and should improve profitability, which is the other side of the revenue coin.

To be fair, the vast majority of revenue still flows through the PEO model, which covers everything from payroll and benefits to compliance and training. If you want to dig into the core mission behind these services, you can review the Mission Statement, Vision, & Core Values of Insperity, Inc. (NSP).

Here is a snapshot of the most recent revenue performance:

Profitability Metrics

You're looking for a clear picture of Insperity, Inc. (NSP)'s financial engine, and the 2025 data shows a business under significant margin pressure right now. The core takeaway is that while the gross margin is stable for the Professional Employer Organization (PEO) model, operational and net profitability has tightened dramatically, driven by healthcare costs.

Insperity's latest trailing twelve-month (TTM) profitability figures for 2025 reflect a challenging environment, especially when compared to the company's own historical performance. The nature of the PEO business means a large portion of revenue passes through as worksite employee wages and benefits, which is why the margins look low compared to a typical software or manufacturing company. Still, the trend is concerning.

Here's the quick math on the latest margins:

• Gross Profit Margin: 14.64%
• Operating Profit Margin: 0.7%
• Net Profit Margin: 0.3%

A 0.3% net margin on an annual revenue base of approximately $6.76 billion (TTM) translates to an implied net profit of roughly $20.28 million, a sharp decline from prior years. This is a very thin cushion.

Trends in Profitability Over Time

The trend in Insperity's profitability leading up to the end of 2025 is a story of cost inflation outpacing pricing power. The gross profit margin, which measures revenue minus the cost of goods sold (primarily worksite employee wages and benefits), has been relatively consistent but is now facing headwinds. The real issue is the sharp drop-off between gross profit and net profit.

For the full year 2025, the company has had to significantly revise its outlook. The latest full-year adjusted EBITDA guidance is now a range of $119 million to $153 million, down from earlier, more optimistic forecasts. This is a clear signal of reduced operating leverage (the ability to grow profit faster than revenue). The primary culprit is the elevated benefits cost trend, which is expected to hover around 9% for the full year 2025.

The company's focus on strategic growth, like the Workday partnership, is a long-term play, but it adds to near-term operating expenses. You can see the full strategic context here: Mission Statement, Vision, & Core Values of Insperity, Inc. (NSP).

Operational Efficiency and Industry Comparison

Insperity's operational efficiency is currently challenged by the PEO model's exposure to healthcare cost volatility. The gross margin per worksite employee (WSE) has decreased, for example, dropping to $240 per month in Q2 2025 from $282 in Q2 2024, reflecting the higher benefits costs. Management is working to control costs, projecting full-year operating expenses to be an overall reduction compared to 2024, even with planned spending on the Workday partnership. That's a defintely necessary action to stabilize the bottom line.

When we stack Insperity up against the PEO industry, its current profitability is underperforming. While the PEO industry itself is a low-margin business-historical data suggests the industry average net profit margin is around 0.60%-Insperity's latest net margin of 0.3% is substantially lower.

Here is a simplified view of the profitability ratios:

The key risk here is that Insperity's pricing and plan design changes, intended to offset the 9% benefits cost trend, may not take effect fast enough to prevent further margin erosion in the very near term. The opportunity is that a successful rollout of the Workday platform and effective cost management could drive a significant rebound in margins starting in 2026, as management anticipates.

Debt vs. Equity Structure

You're looking at Insperity, Inc. (NSP) to understand how they fund their operations, and the quick takeaway is this: the company relies heavily on debt relative to its equity base, but the nature of the Professional Employer Organization (PEO) business complicates that picture.

Insperity, Inc. (NSP)'s balance sheet shows a primary debt (loan capital) of approximately $369.0 million as of the third quarter of 2025, offset by a relatively small total shareholder equity of about $87.0 million. This capital structure is a key factor in the high financial leverage. Here's the quick math: dividing the debt by the equity gives a Debt-to-Equity (D/E) ratio of roughly 4.24:1 (or 424.1%) for the period ending September 2025. To be fair, some analysts calculate this ratio slightly lower, around 3.89, but either figure signals a highly leveraged position.

A D/E ratio above 2.0 is generally considered high leverage for most industries, so Insperity, Inc. (NSP)'s ratio of 4.24:1 is a clear outlier. For context, a major competitor in the PEO space, Automatic Data Processing (ADP), reported a D/E ratio of 1.49 in its fiscal 2025, making Insperity, Inc. (NSP)'s leverage significantly higher. What this estimate hides, however, is the PEO model, where a large portion of their liabilities-around $1.4 billion in current liabilities as of June 2025-is operational float, primarily client payroll and benefit funds that pass through the company.

The company balances this debt financing with a consistent return of capital to shareholders, which is an equity-side action. Through the second quarter of 2025, Insperity, Inc. (NSP) paid $45 million in cash dividends and repurchased 224,000 shares of stock at a cost of $19 million. This suggests management is confident in its cash flow, even with the high leverage. Still, the high D/E ratio means any sustained operational or market downturn could quickly pressure that small equity cushion.

Regarding near-term risks and opportunities, the company has a safety net:

• Maintain liquidity: Insperity, Inc. (NSP) had $280 million available under its credit facility as of Q2 2025.
• No major debt issuances: There have been no recent, large-scale debt issuances or major refinancing activities reported in 2025, indicating stability in their current borrowing arrangements.
• Focus on cash flow: The leverage is managed by strong operating cash flow, which is crucial for servicing the debt and maintaining the high dividend payout.

Your action is to monitor the trend in total debt versus cash flow, not just the D/E ratio in isolation, especially given the operational liability structure unique to the PEO business. For a deeper dive into the company's overall financial health, you can check out the full analysis at Breaking Down Insperity, Inc. (NSP) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You're looking at Insperity, Inc. (NSP) to see if they can cover their short-term bills, and the quick answer is yes, but the margin is tighter than you might prefer. Their liquidity position, while adequate, shows a slight reliance on accounts receivable, which is typical for a service business but warrants a closer look at collection efficiency.

The core of any liquidity check is the Current Ratio (Current Assets divided by Current Liabilities). For Insperity, Inc. (NSP) as of the third quarter of 2025, this ratio stands at 1.12. This means the company has $1.12 in current assets for every dollar of short-term debt, which is defintely above the critical 1.0 threshold, showing a baseline ability to pay obligations due within a year.

Current and Quick Ratios

The Quick Ratio (or Acid-Test Ratio) gives a clearer picture because it strips out less liquid assets like prepaid expenses-for Insperity, Inc. (NSP), this means primarily prepaid insurance and related assets. The Quick Ratio for Q3 2025 is approximately 0.96. This is a small dip below the 1.0 mark, indicating that if you exclude those prepaid items, the company's most readily available cash and receivables are just shy of covering all current liabilities. This is a common situation for a Professional Employer Organization (PEO) where accounts receivable-like the $894 million reported in Q3 2025-are a huge component of current assets.

Here's the quick math on the key liquidity metrics:

Working Capital and Cash Flow Trends

Working capital-the raw difference between current assets and current liabilities-is another measure of operational cushion. In Q3 2025, Insperity, Inc. (NSP) reported or calculated a working capital of about $166.5 million, which is a slight increase from the $160 million reported in Q2 2025. This positive, albeit modest, trend suggests the company is generating a small surplus of liquid assets from its operations, but the margin is thin relative to its total current assets of $1,554 million.

Looking at the cash flow statement, the story gets more nuanced, especially when considering the unexpected, elevated healthcare costs the company has been navigating. Cash Flow from Operating Activities (CFO) for the last twelve months (LTM) was a healthy $86.00 million. This is the engine of the business, and it's running positive, which is crucial. However, the company is spending cash on its growth and shareholder returns:

• Operating Cash Flow (LTM): $86.00 million (Positive cash generation).
• Investing Cash Flow: Capital expenditures were $22 million in the first nine months of 2025, indicating continued investment in the business infrastructure.
• Financing Cash Flow: The company paid $68 million in dividends and repurchased $19 million in shares in the first nine months of 2025, a significant cash outflow to shareholders.

The net change in cash for a recent quarter was negative, at -$113.00 million, which is a key near-term risk. This highlights the pressure from higher benefits costs and the significant cash outlay for shareholder returns, even as the company works to improve its financial outlook for 2026 through a new agreement with UnitedHealthcare. To fully understand the strategic direction behind these numbers, you should review the Mission Statement, Vision, & Core Values of Insperity, Inc. (NSP).

Valuation Analysis

You're looking at Insperity, Inc. (NSP) after a tough year, wondering if the stock is a deep value opportunity or a classic value trap. My analysis suggests Insperity, Inc. is currently overvalued on trailing earnings but appears more reasonably priced on forward projections, creating a complex picture for a value-oriented investor.

The market has punished Insperity, Inc. severely, with the stock price falling by over 55.30% in the last 12 months, hitting a new 52-week low of $32.47 in mid-November 2025. This sharp drop reflects the recent Q3 2025 earnings miss, where the company reported an EPS of ($0.20), falling short of the consensus estimate of $0.22, and a subsequent downward revision of its full-year 2025 EPS forecast to a range of $0.84 to $1.47.

Is Insperity, Inc. Overvalued or Undervalued?

The answer depends on whether you look in the rearview mirror or through the windshield. Right now, the trailing valuation metrics scream overvalued due to the depressed earnings. The key is to map the near-term risk-the dividend's sustainability-to the potential for a rebound in 2026 earnings.

• Trailing Price-to-Earnings (P/E): 71.44
• Forward Price-to-Earnings (P/E): 16.72
• Price-to-Book (P/B): 13.85
• Enterprise Value-to-EBITDA (EV/EBITDA): 23.10

Here's the quick math: A trailing P/E ratio of 71.44 is extremely high, especially compared to the Industrials sector average. This high ratio is a direct result of the recent earnings slump, not an indication of strong growth confidence. However, the forward P/E of 16.72 implies that analysts expect a significant earnings recovery, which is the only thing making the current price justifiable.

The Dividend Durability Question

You're getting a high dividend yield, but you need to be honest about the risk. Insperity, Inc. currently offers an attractive annual dividend of $2.40 per share, translating to a yield of approximately 7.51% as of November 2025. But this is a red flag, not a green light, right now.

The dividend payout ratio is an unsustainably high 536.47% based on the most recent trailing earnings. What this estimate hides is that the company is paying out more than five times its net income in dividends. This is defintely not a long-term strategy and raises serious questions about whether the dividend will be cut if the earnings recovery is delayed past 2026. This is the single biggest near-term risk for income investors.

Analyst Consensus and Actionable Insight

The Wall Street consensus echoes this mixed signal. Analysts currently hold a consensus rating of Hold on Insperity, Inc. The average 12-month price target is $47.67, which suggests a potential upside of over 45% from the recent low trading price.

To be fair, the range is wide-from a low target of $34.00 to a high of $71.00-showing a clear split in opinion between those who see the recent drop as a temporary blip and those who see a fundamental shift. Your action should be to wait for the next earnings report to confirm the forward EPS recovery before making a move.

If you want to understand the institutional drivers behind the stock's volatility, you should be Exploring Insperity, Inc. (NSP) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at Insperity, Inc. (NSP) and seeing a business model with steady client-employee growth, but the recent earnings miss tells a clearer story: the core risk is a financial one, driven by external market conditions. The most urgent issue is the escalating cost of employee benefits, specifically healthcare claims, which is eating directly into profitability. This is a classic PEO (Professional Employer Organization) challenge; managing the risk pool is everything.

The company's full-year 2025 guidance was slashed, reflecting this pressure. They now forecast full-year adjusted EPS in a range of only $0.84 to $1.47, down sharply from the prior forecast of $1.81 to $2.51. That's a material change in your expected return. Here's the quick math: the benefits cost trend for the full year is expected to remain at an elevated 9.1% over 2024, significantly higher than budgeted, and that's the primary driver of the earnings shortfall. It's a systemic problem, not just an Insperity, Inc. issue, as the broader health insurance industry trend for 2025 is also expected to be 200 to 400 basis points higher than initial estimates. Still, Insperity, Inc. has to manage it.

Insperity, Inc. faces three clear, near-term risks that demand your attention:

• Financial Risk: The high benefits cost trend is compressing margins. Full-year adjusted EBITDA guidance is now only $119 million to $153 million.
• Operational Risk: To offset rising costs, Insperity, Inc. is implementing aggressive repricing and plan design changes. This creates a risk of client attrition, even though client retention has been strong, averaging 99% per month.
• Strategic Risk: The company's dividend payout ratio is an unsustainably high 521.74%, given the revised 2025 earnings. This raises serious questions about the durability of the current dividend, which is a key component of the stock's appeal for many investors.

To be fair, management is taking concrete steps. Their mitigation strategy centers on two key actions: a new contract extension with UnitedHealthcare (UHC) through 2028, which includes risk transfer measures projected to significantly reduce future claim costs, and the rollout of the HRScale solution with Workday, which targets the mid-market for new growth. This strategic investment is key to their long-term Mission Statement, Vision, & Core Values of Insperity, Inc. (NSP)., but the payoff is a 2026 story, not a 2025 one.

What this estimate hides is the potential for a macroeconomic slowdown to impact their core metric: average paid worksite employee growth. While full-year growth is anticipated at 1%, a weaker labor market could slow new client onboarding and hiring, further pressuring revenue. The company's balance sheet shows a strong Altman Z-Score of 4.58, suggesting low bankruptcy risk, but the debt-to-equity ratio of 3.29 is high for the sector, meaning they carry significant financial leverage.

Here is a snapshot of the key financial risks and mitigation efforts:

Finance: Monitor the Q4 2025 claims development and the company's commentary on the UHC contract's near-term impact, as it will dictate 2026 guidance.

Growth Opportunities

You want to know where Insperity, Inc. (NSP) goes from here, especially after a tough year on margins. The immediate future is a rebuilding year focused on fixing profitability, but the long-term growth story is still intact, driven by a strategic pivot to the larger mid-market and a major technology upgrade. The key is whether their new pricing can outrun the rising cost of healthcare benefits.

Honestly, 2025 has been a transitional period, with profitability taking a hit from benefit cost volatility. But management is executing a clear plan to drive revenue growth and stabilize margins in 2026. The average number of worksite employees (WSEEs) paid per month grew 1% year-over-year in the third quarter of 2025 to 312,842, which is a solid unit growth signal despite the headwinds.

Strategic Initiatives: Tech and Market Expansion

The biggest growth driver isn't just selling more of the same; it's a product innovation strategy designed to expand their total addressable market (TAM). Insperity, Inc. has completely updated its HR solutions portfolio, which now includes three distinct offerings.

• Insperity HR360: The flagship Professional Employer Organization (PEO) service.
• Insperity HR Core: A traditional employment solution for different client needs.
• Insperity HRScale: A new joint solution with Workday, specifically targeting larger mid-market clients.

This strategic partnership with Workday is a big deal. It's a tech-driven push into the mid-market that required a planned investment of approximately $58 million in 2025 for implementation. This is a clear move to attract larger clients and reduce client acquisition costs over time. The launch of HRScale in Q3 2025 is defintely a pivotal step.

Future Revenue and Earnings Outlook

The near-term financial picture reflects the challenge of elevated healthcare costs, which is why the 2025 earnings per share (EPS) forecast saw a significant downward revision. Management has been aggressive in implementing pricing adjustments and plan design changes to counter the rising benefits cost trend, which is now expected to be between 6.5% and 7.5% for the full year 2025.

Here's the quick math on the current analyst consensus and company guidance for the full 2025 fiscal year. What this estimate hides is the underlying unit growth, which remains positive, with full-year WSEE growth projected between 0.5% and 3%.

Competitive Advantages and Positioning

Insperity, Inc. maintains a strong competitive position because of its comprehensive service model and high client stickiness. Their focus on the small and midsize enterprise (SMB) market is a core strength. They offer an unrivaled breadth and depth of PEO services (Professional Employer Organization), which translates into high client retention, reaching 91% in Q1 2025.

The cloud-based human capital management platform, Insperity Premier, provides a comprehensive technology suite that's hard for smaller competitors to match. This blend of premium HR service and technology is what helps businesses manage administrative relief and reduced liabilities. If you are looking for a deeper dive into the investor base and who is betting on these advantages, you should be Exploring Insperity, Inc. (NSP) Investor Profile: Who's Buying and Why?