NRC Health (NRC) investor relations material

Executive summary

• Q3 revenue rose 11% YoY to $38.399M; TRCV increased 9% to $154.1M, with a large customer launch on schedule and multi-year renewals supporting recurring revenue.

• Q3 operating income grew 15% to $8.908M, while 9M operating income fell 37% to $11.2M, primarily reflecting executive-transition compensation and technology investment.

Financial highlights

• Q3 revenue growth included $3.2M more recurring revenue from existing customers and $0.6M from new customers; 9M increases were $4.4M and $2.0M, respectively.

• Q3 GAAP net income was $4.704M versus $4.122M; adjusted net income was $4.7M.

• Q3 direct expenses rose 24% to $15.4M, including ~$1.5M for the HUB conference; SG&A declined 2% to $12.0M, partly due to lower stock compensation.

• 9M revenue grew 6% to $108.594M; GAAP net income was $4.643M versus $9.802M.

• 9M SG&A rose 20% to $48.4M, including $7.4M higher executive-related stock compensation; direct expenses rose 11% to $42.6M.

Outlook and guidance

• Expanding contract value is expected to convert into revenue, with operating leverage supporting higher profitability and free cash flow over time.

• Further sequential adjusted EBITDA margin improvement is expected in Q4 as HUB conference costs are absorbed and existing implementations contribute; Q4 revenue also benefits from seasonal Experience surveys and one-time product events.

• The rounding platform phase of the large customer agreement remains on track to go live in Q3 2027; its revenue may lag and is expected to be meaningfully smaller than the first phase.

• Remaining revenue for contracts with original terms over one year was $201.8M; $25.2M is expected to be recognized in the remainder of 2026.

• Liquidity sources and operating cash flows are expected to meet projected capital and debt maturity needs for the foreseeable future.