0001437749-26-007002
SEC filingNational Research Corporation reported revenue of $137.4 million for FY 2025, a decline from $143.1 million in FY 2024. Net income decreased to $11.6 million from $24.8 million in the prior year, with earnings per share dropping to $0.50 from $1.05. The decline was driven by increased selling, general and administrative expenses ($54.8 million vs. $44.9 million) and higher interest expense ($4.8 million vs. $2.6 million). Operating cash flow remained strong at $26.4 million, supporting capital expenditures of $10.7 million, dividend payments of $11.0 million, and share repurchases of $20.2 million. The company maintains a leveraged balance sheet with total debt of $79.0 million and shareholders' equity of $14.0 million.
National Research Corporation reported FY 2025 revenue of $137.4 million, representing a 4.0% decline from $143.1 million in FY 2024. Net income decreased significantly to $11.6 million from $24.8 million in the prior year, with earnings per share falling to $0.50 from $1.05. Operating income declined 35.8% to $22.6 million from $35.2 million. The company's operating margin compressed to 16.4% from 24.6% in the prior year. Weighted average shares outstanding decreased to 22.4 million from 23.7 million, reflecting ongoing share repurchases. The company's financial performance was impacted by increased operating expenses and higher interest costs.
The company's revenue consists primarily of subscription-based service agreements, which accounted for $125.6 million or 91.4% of total revenue in FY 2025. This represents a decline from $134.2 million in subscription revenue in FY 2024. Fixed, non-subscription services contributed $5.4 million, services recognized at a point in time contributed $5.7 million, and unit price services contributed $0.7 million. The company's revenue is concentrated in the healthcare industry, with the ten largest customers accounting for 20% of total revenue in FY 2025, up from 17% in FY 2024 and 15% in FY 2023. The company expects a substantial portion of future revenue to continue to be derived from renewable service contracts.
Gross profit is not explicitly disclosed in the financial statements. Operating expenses increased to $114.8 million from $107.9 million in FY 2024, with selling, general and administrative expenses rising significantly to $54.8 million from $44.9 million. Direct expenses decreased to $52.4 million from $56.9 million. Depreciation and amortization expense increased to $7.6 million from $6.0 million. The operating margin declined to 16.4% from 24.6% in the prior year. Interest expense increased to $4.8 million from $2.6 million, reflecting higher debt levels and interest rates. The effective tax rate was 35.0% compared to 24.2% in the prior year.
Operating cash flow was $26.4 million, a decrease from $34.6 million in FY 2024. Investing activities used $10.7 million primarily for capital expenditures. Financing activities used $15.8 million, including $11.0 million for dividend payments, $20.2 million for share repurchases, and net debt repayments of $0.3 million. Cash and equivalents ended at $4.1 million. Total assets were $134.9 million, including goodwill of $66.2 million and net property and equipment of $40.5 million. Total liabilities were $120.9 million, including notes payable of $79.0 million. Shareholders' equity declined to $14.0 million from $31.3 million, primarily due to treasury stock repurchases and dividends exceeding net income.
The company faces risks related to contract renewals and customer retention, with the ten largest customers accounting for 20% of revenue. The healthcare analytics market is highly competitive, with primary competitors including Press Ganey and Qualtrics. The company operates in a regulated industry subject to changes in healthcare legislation and reimbursement policies. Future revenue may be affected by economic conditions, industry consolidation, and potential pandemics. The company's credit agreement requires maintenance of a minimum fixed charge coverage ratio of 1.10x and a cash flow leverage ratio of 3.50x or less. The company continues to invest in internal-use software development and strategic acquisitions to expand its solution portfolio.