This article first appeared on GuruFocus .
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Total Recurring Contract Value (TRCV):$151.9 million, up 11% year-over-year.
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Revenue:Increased approximately 4% year-over-year and 2% sequentially.
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Adjusted EBITDA Margin:27%, consistent with the first quarter.
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Adjusted EBITDA:$9.4 million.
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Adjusted Net Income:$6.9 million.
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Adjusted EPS:$0.31 per diluted share.
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Free Cash Flow:$62,000, $4.2 million higher than the prior year.
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Dividend:Paid $0.16 per share.
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Share Repurchase:Approximately 397,000 shares repurchased under the $60 million authorization.
Release Date: July 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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NRC Health ( NASDAQ:NRC ) reported an 11% year-over-year increase in Total Recurring Contract Value (TRCV), showcasing diversified growth across its business segments.
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The Governance Institute achieved its strongest bookings performance in seven years, with a nearly 10% year-over-year TRCV growth.
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NRC Health's product innovations, such as Ambient Listening with Agentic AI, are enhancing customer engagement and improving real-time experience measurement.
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The company maintained a consistent adjusted EBITDA margin of 27%, reflecting disciplined investment in delivery and product development.
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NRC Health's strategic focus on insight, engagement, and enablement is driving differentiation in the healthcare industry, particularly in engagement and enablement layers.
Negative Points
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Second quarter revenue growth was modest at approximately 4% year-over-year, impacted by a two-point headwind from an accounting change related to reputation monitoring solutions.
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Year-over-year adjusted EBITDA was lower by $900,000, primarily due to higher operating expenses tied to expansion and product investments.
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The average deal size in the sales pipeline has decreased, reflecting the size of organizations currently coming to market.
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There is market uncertainty due to the recent acquisition of Press Ganey by Qualtrics, causing some customers to pause and reassess their RFP processes.
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NRC Health's tax provision for Q2 was affected by non-deductible expenses, leading to an unusual effective tax rate that is not comparable to future quarters.
Q & A Highlights
Q: Can you elaborate on the bookings performance for The Governance Institute (TGI) and its impact on future revenue? A: Trent Green, CEO: The Governance Institute is a unique asset with a strong client base. It's a top-of-funnel product purchased by CEOs, providing visibility into organizational priorities. While it's only about 10% of our business, it creates important connections within organizations. We now have a dedicated sales team for TGI, which is generating additional interest and connectivity through its network.
Q: Can you provide an update on the landmark customer win and the current sales pipeline? A: Trent Green, CEO: We are live with the landmark customer, with revenue recognition starting this month. The next phase will be completed by the end of the year. Our sales pipeline is strong, up 60% from last year, although the average deal size is down due to market uncertainties. We are seeing increased sales activity, with a 35% rise in meetings.
Q: How are you monetizing the Agentic AI features, and what impact does AI have on future margins? A: Trent Green, CEO: Currently, AI features are included in our rounding product to differentiate NRC and improve retention. We are evaluating premium add-ons for AI in the future. AI is also being used to enhance customer success and implementation efficiency, which should improve our cost to serve over time.
Q: How does the acquisition of Press Ganey by Qualtrics affect NRC's competitive position? A: Trent Green, CEO: The acquisition has introduced uncertainty in the market, causing some customers to pause and reassess. We offer certainty with our established platform. While the market is uncertain about the combined offering from Qualtrics and Press Ganey, we continue to focus on our strategic differentiators and have seen a 60% increase in our Q2 pipeline.
Q: How are new service offerings impacting customer engagement and TRCV? A: Trent Green, CEO: New offerings like our rounding platform and Improvement Navigator are embedding NRC tools into daily workflows, making us stickier with organizations. Our partnership with the Health Experience Foundation further enhances our engagement and enablement capabilities, helping translate human understanding into practical improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
