NRC Health Q2: GAAP Loss Widens on Executive Comp Charges, but Adjusted EBITDA Holds at 27% Margin
NRC has more than doubled off its 52-week low of $11.014.
Summary
NRC Health reported Q2 revenue of $35.4M (+4% YoY) and a GAAP net loss of ($3.3M) due to previously announced executive equity vesting charges. Adjusted EBITDA was $9.4M (27% margin), and TRCV grew 11% to $151.9M, signaling healthy recurring revenue trends.
Key Events · Earnings and Guidance · NRC
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GAAP Loss Driven by One-Time Comp Charges
Q2 GAAP net loss was ($3.3M), or ($0.15) per share, compared to ($0.1M) a year ago. The loss includes $7.4M in non-cash stock compensation and $3.2M in management transition costs tied to previously announced accelerated equity vesting and tax bonuses.
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Adjusted Profitability Remains Solid
Excluding those charges, adjusted net income was $6.9M ($0.31 per share), up 7% YoY. Adjusted EBITDA was $9.4M, a 27% margin, down slightly from 30% a year ago but still healthy.
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Revenue Growth and Leading Indicator Strength
Revenue rose 4% to $35.4M. Total Recurring Contract Value (TRCV), a forward-looking metric, increased 11% year-over-year to $151.9M, indicating strong future revenue visibility.
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Cash Flow Pressured by Bonus Payments
Operating cash flow was $1.4M, and free cash flow was just $0.1M after $1.3M in capex. Both were impacted by approximately $2.9M in cash payments for the executive transition bonuses.
Analysis · NRC · Industrial Applications And Services
NRC Health's second quarter tells a tale of two income statements. The GAAP net loss deepened to ($3.3M) from ($0.1M) a year ago, driven by $7.4M in non-cash stock compensation and $3.2M in management transition costs—largely the previously disclosed accelerated vesting and tax bonuses. Strip those out, and adjusted net income rose 7% to $6.9M, while adjusted EBITDA margin held at a healthy 27%. The top line grew 4% to $35.4M, and the leading indicator TRCV jumped 11% to $151.9M, suggesting future revenue momentum. The board also declared a $0.16 quarterly dividend. The headline GAAP loss is noise from one-time equity awards; the underlying business is stable and generating cash, though free cash flow was a razor-thin $0.1M after $2.9M in cash payments for those transition bonuses.
At the time of this filing, NRC was trading at $22.34 on NASDAQ in the Industrial Applications And Services sector, with a market capitalization of approximately $503.5M. The 52-week trading range was $11.01 to $23.25. This filing was assessed with neutral market sentiment and an importance score of 7 out of 10.