NRC Health shares plunge 18% on Q4 earnings miss
Adjusted profit of $0.16 per share falls short of analyst expectations as healthcare analytics firm reports modest revenue growth
NRC Health shares tumbled 18% on Tuesday after the healthcare analytics provider reported fourth-quarter earnings that disappointed Wall Street expectations, highlighting concerns about profitability despite modest revenue growth.
The Lincoln, Nebraska-based company posted adjusted earnings per share of $0.16 for the quarter ended December 31, 2025, according to the company's earnings announcement. The results fell short of analyst estimates, triggering the steepest single-day decline for the stock in more than a year. Shares closed at $17.86, giving the company a market capitalization of approximately $469 million.
The earnings miss comes at a challenging time for NRC Health, which had seen its shares climb from a 52-week low of $9.52 to above $22 earlier this year. The stock's rapid decline erased much of those gains, pushing the shares below their 50-day moving average of $18.70.
"The fourth-quarter results reflect strong, disciplined execution and deep customer trust," said Trent Green, chief executive officer of NRC Health, in the earnings statement. "With Total Recurring Contract Value reaching $144 million and momentum building across the portfolio, we finished the year with a strong foundation for continued execution."
Despite management's optimistic tone, the financial performance revealed underlying challenges. Revenue reached $35.2 million in the fourth quarter, representing just a 2% increase from the previous quarter. GAAP net income came in at $1.8 million, or $0.08 per diluted share, while adjusted net income totaled $3.4 million, or $0.16 per share.
The company's total recurring contract value, a key metric for subscription-based businesses, increased 8% year-over-year to $144.1 million, marking the fifth consecutive quarter of sequential growth. Cash flow from operations also showed strength, rising 13% year-over-year to $7.2 million in the quarter.
For the full year 2025, NRC Health reported revenue of $137.4 million, with GAAP earnings per share of $0.50 and adjusted EPS of $0.93. However, the company's growth trajectory has slowed, with quarterly earnings declining 24.9% year-over-year and revenue dropping 3.4% over the same period, according to market data.
The valuation concerns are particularly acute given the stock's current price-to-earnings ratio of 28.65 times trailing earnings. Investors question whether the company can justify this premium multiple in the face of declining earnings growth and modest revenue expansion.
NRC Health's board declared a quarterly cash dividend of $0.16 per share, payable April 10, 2026, to shareholders of record as of March 27, 2026. The dividend, which reflects an annual yield of approximately 2.4%, may provide some support for the stock but appears insufficient to offset investor concerns about the earnings trajectory.
The company operates in the competitive healthcare analytics market, providing data collection and analysis services to healthcare organizations seeking to improve patient and employee experiences. NRC Health's high insider ownership of 48.4% suggests leadership remains closely aligned with shareholder interests, but this concentration also means significant selling pressure when insiders choose to reduce positions.
Institutional investors hold 49.1% of outstanding shares, indicating broad market interest in the stock. However, Tuesday's steep decline suggests these investors may be reassessing their positions following the earnings disappointment.
Looking ahead, NRC Health provided no explicit forward-looking financial guidance in its earnings announcement. The company's ability to accelerate revenue growth and restore earnings momentum will be critical to regaining investor confidence. Management's emphasis on "unprecedented complexity" in the healthcare sector suggests NRC Health believes its services remain essential to healthcare providers navigating these challenges.
The stock's beta of 0.5 indicates it typically moves less than the broader market, making Tuesday's 18% decline particularly notable. Such a sharp drop suggests investors are fundamentally reassessing the company's near-term prospects rather than reacting to general market volatility.