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What changed in NATIONAL RESEARCH CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NATIONAL RESEARCH CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+231 added−255 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-17)

Top changes in NATIONAL RESEARCH CORP's 2025 10-K

231 paragraphs added · 255 removed · 184 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+12 added−8 removed23 unchanged
Biggest changeWe have realized that demonstrating Human Understanding® as associates is so much larger than just honoring and recognizing personal characteristics such as race, age, gender, marital status, background, or creed. Our passions, pastimes, families, pets, politics, and communities impact how we see the world. This in turn impacts how we understand or misunderstand one another.
Biggest changeOur passions, pastimes, families, pets, politics, and communities impact how we see the world. This in turn impacts how we understand or misunderstand one another. We acknowledge that our efforts will be ongoing and must continually be re-evaluated. Available Information More information regarding NRC Health is available on our website at www.nrchealth.com.
In the public sector, Medicare provides health coverage for individuals aged 65 and older, while Medicaid provides coverage for low-income families and other individuals in need. Both programs are administered by the CMS. With the aging of the U.S. population, Medicare enrollment has increased significantly.
In the public sector, Medicare provides health coverage for individuals aged 65 and older, while Medicaid provides coverage for low-income families and other individuals in need. Both programs are administered by CMS. With the aging of the U.S. population, Medicare enrollment has increased significantly.
Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, rounding, and brand loyalty.
Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty.
We also compete with market research firms and technology solutions which provide survey-based, general market research or voice of the customer feedback capabilities and firms that provide services or products that complement healthcare performance assessments such as healthcare software or information systems.
We also compete with market research firms and technology solutions which provide survey-based, general market research or voice of the customer feedback capabilities and firms that provide services or products that complement healthcare performance such as healthcare software or information systems.
Our primary competitors among such research firms include Press Ganey and Qualtrics, both of which we believe have significantly higher annual revenue than us, and several other organizations that we believe have less annual revenue than us.
Our primary competitors among such firms include Press Ganey and Qualtrics, both of which we believe have significantly higher annual revenue than us, and several other organizations that we believe have less annual revenue than us.
TGI’s subscription-based, value-driven membership services are provided through national conferences, publications, advisory services, and an online portal designed to improve the effectiveness of hospital and healthcare systems by continually strengthening their board governance, strategic planning, medical leadership, management performance and customer loyalty.
TGI’s subscription-based, value-driven membership services are provided through national conferences, publications, advisory services, and an online portal designed to improve the effectiveness of hospital and healthcare systems by continually strengthening their board governance, strategic planning, peer networking, medical leadership, management performance and customer loyalty.
TGI also conducts research studies and tracks industry trends showcasing emerging healthcare trends and best practice solutions of healthcare system boards across the country. TGI thought leadership helps our client board members and executives inform and guide their organization’s strategic priorities in alignment with the rapidly changing healthcare market.
TGI also conducts research studies and tracks industry trends showcasing emerging healthcare trends and best practice solutions of healthcare system boards across the country. TGI thought leadership helps our customer board members and executives inform and guide their organization’s strategic priorities in alignment with the rapidly changing healthcare market.
We provide tools and solutions to capture, interpret and improve the CAHPS data required by CMS as well as real time feedback that enables clients to better understand what matters most to people at key moments in their relationship with a health organization.
We provide tools and solutions to capture, interpret and improve the CAHPS data required by CMS as well as real-time feedback that enables customers to better understand what matters most to people at key moments in their relationship with a health organization.
In addition, longer life spans and greater prevalence of chronic illnesses among both the Medicare and Medicaid populations have placed tremendous demands on the health care system. An increasing percentage of Medicare reimbursement and reimbursement from commercial payers has been determined under value payment models, based on factors such as patient readmission rates and provider adherence to certain quality-related protocols.
In addition, longer life spans and greater prevalence of chronic illnesses among both the Medicare and Medicaid populations have placed tremendous demands on the health care system. 6 Table of Contents An increasing percentage of Medicare reimbursement and reimbursement from commercial payers has been determined under value payment models, based on factors such as patient readmission rates and provider adherence to certain quality-related protocols.
Our solutions build on the “Eight Dimensions of Patient-Centered Care,” a philosophy developed by noted patient advocate Harvey Picker, who believed patients’ experiences are integral to quality healthcare. This foundation has been enhanced through our digital platform offering that provides the delivery of data and insights on a real time basis to understand what matters most to each individual.
Our solutions build on the “Eight Dimensions of Patient-Centered Care,” a philosophy developed by noted patient advocate Harvey Picker, who believed patients’ experiences are integral to quality healthcare. This foundation has been enhanced through our digital platform offering that provides the delivery of data and insights to understand what matters most to each individual.
Patient Experience Solutions – Our Experience solutions are provided on a subscription basis via a cross-continuum multi-mode digital platform that collects and measures data and then delivers business intelligence that our clients utilize to improve patient experience, engagement, and loyalty.
Patient Experience Solutions – Our Patient Experience solutions are provided on a subscription basis via a cross-continuum multi-mode digital platform that collects and measures data and then delivers business intelligence that our customers utilize to improve patient experience, engagement, and loyalty.
Factors that could affect actual results or outcomes include, without limitation, the following factors: ● The possibility of non-renewal of our client service contracts, reductions in services purchased or prices, and failure to retain key clients; ● Our ability to compete in our markets, which are highly competitive with new market entrants, and the possibility of increased price pressure and expenses; ● The possibility that our solutions and technology do not perform as expected ● The possibility that our acquisitions and partnerships do not achieve the increased demand/profitability expected; ● The likelihood that a pandemic will adversely affect our operations, sales, earnings, financial condition and liquidity; ● The likelihood that global conflicts will adversely affect our operations, sales, earnings, financial condition and liquidity; ● The effects of an economic downturn; ● The impact of consolidation in the healthcare industry; ● The impact of federal healthcare and budget legislation, executive orders, cost-saving measures, and other regulatory changes; ● Our ability to attract and retain key managers and other personnel; ● The possibility that our intellectual property and other proprietary information technology could be copied or independently developed by our competitors; ● Our ability to maintain effective internal controls; ● The possibility for failures or deficiencies in our information technology platform; ● The possibility that we or our third-party providers could be subject to cyber-attacks, security breaches or computer viruses; and ● The factors set forth under the caption “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.
Factors that could affect actual results or outcomes include, without limitation, the following factors: ● The possibility of non-renewal of our customer service contracts, reductions in services purchased or prices, and failure to retain key customers; ● Our ability to compete in our markets, which are highly competitive with new market entrants, subject to consolidation among existing competitors, and the possibility of increased price pressure and expenses; ● The possibility that our solutions and technology do not perform as expected; ● The possibility that our acquisitions and partnerships do not achieve the increased demand/profitability expected; ● The likelihood that a pandemic will adversely affect our operations, sales, earnings, financial condition, and liquidity; ● The likelihood that global conflicts or tariffs will adversely affect our operations, sales, earnings, financial condition, and liquidity; ● The effects of an economic downturn; ● The impact of consolidation in the healthcare industry; ● The impact of federal healthcare and budget legislation, executive orders, cost-saving measures, and other regulatory changes; ● Our ability to attract and retain key managers and other personnel; ● The possibility that our intellectual property and other proprietary information technology could be copied or independently developed by our competitors; ● Our ability to maintain effective internal controls; ● The possibility for failures or deficiencies in our information technology platform; 1 Table of Contents ● The possibility that we or our third-party providers could be subject to cyber-attacks, security breaches, or computer viruses; and ● The factors set forth under the caption “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K and various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.
Our end-to-end solutions enable our clients to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of each individual.
Our end-to-end solutions enable our customers to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of each individual.
We provide access to such materials through our website as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the Securities and Exchange Commission (the “SEC”). Reports and amendments posted on our website do not include access to exhibits and supplemental schedules electronically filed with the reports or amendments.
We provide access to such materials free of charge through our website as soon as reasonably practicable after electronically filing such material with, or furnishing it to, the Securities and Exchange Commission (the “SEC”). Reports and amendments posted on our website do not include access to exhibits and supplemental schedules electronically filed with the reports or amendments.
Since our founding in 1981, we have focused on meeting the evolving information needs of the healthcare industry through internal product development, as well as select acquisitions. We are a Delaware corporation headquartered in Lincoln, Nebraska. Human Understanding Solutions Healthcare experiences are human experiences.
Since our founding in 1981, we have focused on meeting the evolving information needs of the healthcare industry through internal product development, as well as select acquisitions. We are a Delaware corporation headquartered in Lincoln, Nebraska. 2 Table of Contents Human Understanding Solutions Healthcare experiences are human experiences.
The Associate Experience team and Associate Lifecycle Belonging committee coordinate activities and opportunities for everyone on these topics, and act as advocates of a workplace culture full of Human Understanding®. As we focus on Human Understanding® in the workplace, we have considered what creating and cultivating a workplace full of Human Understanding® means.
Our Associate Experience team and Associate Lifecycle Belonging committee coordinate activities and opportunities for our associates on these topics, and act as advocates of a workplace culture full of Human Understanding®. As we focus on Human Understanding® in the workplace, we have considered what creating and cultivating a workplace full of Human Understanding® means.
CAHPS survey data can be collected and measured as an integrated service within our digital platform or independently as a legacy service offering. Our Experience solutions provide healthcare systems with the ability to receive and act on customer and employee feedback across all care settings in real-time.
CAHPS survey data can be collected and measured as an integrated service within our digital platform or independently as a legacy service offering. Our Patient Experience solutions provide healthcare systems with the ability to receive and act on customer and employee feedback across all care settings.
NRC Health has built a comprehensive experience management stack to create a game-changing platform with the goal of driving the most human healthcare experiences for everyone – from patients and caregivers to consumers and communities.
NRC Health has built a comprehensive experience management stack to create a differentiated platform with the goal of driving the most human healthcare experiences for everyone – from patients and caregivers to consumers and communities.
We engage in marketing activities that generate demand for our solutions, engage existing clients and enhance our brand visibility in the marketplace.
We engage in marketing activities that generate demand for our solutions, engage existing customers, and enhance our brand visibility in the marketplace.
By illuminating the complete care journey in real time, our clients can ensure each individual receives the care, respect, and experience they deserve. Developing a longitudinal profile of what healthcare customers want and need allows for organizational improvement and increased customer loyalty.
By illuminating the complete care journey, our customers can ensure each individual receives the care, respect, and experience they deserve. Developing a longitudinal profile of what healthcare customers want and need allows for organizational improvement and increased customer loyalty.
We generate the majority of our revenue from the renewal of subscription-based client service agreements, supplemented by sales of additional solutions to existing clients and the addition of new clients. Our sales activities are carried out by our growth team staffed with professional, trained sales associates.
We generate the majority of our revenue from the renewal of subscription-based customer service agreements, supplemented by sales of additional solutions to existing customers and the addition of new customers. Our sales activities are carried out by our growth team staffed with professional, trained sales associates.
Using our solutions, our partners gain insights into what people think and how they feel about their organizations in real-time, allowing them to build on their strengths and implement service recovery with greater speed and personalization.
Using our solutions, our healthcare system customers gain insights into what people think and how they feel about their organizations in real-time, allowing them to build on their strengths and implement service recovery with greater speed and personalization.
We believe that we can grow revenue and earnings through (1) increasing scope of services and sales of our existing solutions to our existing clients (or cross-selling), (2) winning additional new clients through market share growth in existing market segments, (3) developing and introducing new solutions to new and existing clients, and (4) pursuing acquisitions of, or investments in, firms providing products, solutions or technologies which complement ours.
We believe that we can grow revenue and earnings through (1) increasing scope of services and sales of our existing solutions to our existing customers (or cross-selling), (2) winning additional new customers through market share growth in existing market segments, (3) developing new solutions and expanding use cases to new and existing customers, and (4) pursuing acquisitions of, or investments in, firms providing products, solutions or technologies which complement ours.
Comprehensive portfolio of solutions . Our portfolio of subscription-based solutions provides actionable information and analysis to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, and brand loyalty.
Our portfolio of subscription-based solutions provides actionable information, analysis, and workflow enablement tools to healthcare organizations across a range of mission-critical, constituent-related elements, including patient experience, service recovery, care transitions, employee engagement, reputation management, rounding, and brand loyalty.
We believe that there is an opportunity to add new clients across all solutions. Our sales organization is actively identifying and engaging new client prospects with a focus on demonstrating the economic value derived from adopting the portfolio of solutions in alignment with the prospect’s strategic objectives. Adding new solutions.
Adding new customers. We believe that there is an opportunity to add new customers across all solutions. Our sales organization is actively identifying and engaging new customer prospects with a focus on demonstrating the economic value derived from adopting the portfolio of solutions in alignment with the prospect’s strategic objectives. Adding new solutions and use cases.
Markets Growth Strategy We believe that the value proposition of our current solutions, on the whole positions us to benefit from multiple growth opportunities.
Growth Strategy We believe that the value proposition of our current solutions positions us to benefit from multiple growth opportunities.
On February 26, 2025, our Board of Directors appointed Trent Green as our Chief Executive Officer and to serve as a director, both effective June 1, 2025. Mr. Green brings more than 25 years of healthcare leadership experience, most recently serving as Chief Executive Officer of Amazon One Medical and previously as Chief Operating Officer of Legacy Health.
Trent Green was appointed as our Chief Executive Officer and to serve as a director, both effective June 1, 2025. Mr. Green brings more than 25 years of healthcare leadership experience, most recently serving as Chief Executive Officer of Amazon One Medical and previously as Chief Operating Officer of Legacy Health.
We believe we have achieved a market leadership position through our more than 40 years of industry innovation and experience, as well as our long-term, recurring revenue relationships (solutions that are used or required by a client each year) with many of the healthcare industry’s largest organizations.
We believe we have achieved a market leadership position through our nearly 45 years of industry innovation and experience, as well as our long-term, recurring revenue relationships (solutions that are used or required by a customer each year) with many of the healthcare industry’s largest organizations.
We believe access to, and analysis of, our extensive consumer-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships and build loyalty. Our expertise includes the efficient capture, transmittal, analysis, and interpretation of critical data elements from millions of healthcare consumers.
We believe access to, analysis of, and acting on our extensive individual-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships, build loyalty, and improve processes. Our expertise includes efficient capture, transmittal, analysis, and interpretation of critical data elements from millions of healthcare consumers and thousands of clinicians.
The need for effective solutions in the market segments that we serve is evolving to align with emerging healthcare consumerism trends. The evolving market creates an opportunity for us to introduce new solutions that leverage and extend our existing core competencies.
The need for effective solutions in the market segments that we serve is evolving to align with emerging healthcare trends. The evolving market creates an opportunity for us to introduce new solutions that leverage and extend our existing core competencies, as well as develop new use cases for new market segments.
Our platform includes features and capabilities built specifically for healthcare providers, including a library of performance improvement content which can be tailored to the provider based on their specific customer feedback profile. 5 Table of Contents Experienced senior management team led by our founder. Our senior management team has extensive industry and leadership experience. Michael D.
Our platform includes features and capabilities built specifically for healthcare providers, including a library of performance improvement content which can be tailored to the provider based on their specific customer feedback profile. Experienced senior management team. Our senior management team has extensive industry and leadership experience.
We believe that our focus on the healthcare industry, extensive portfolio of solutions, motivated sales force, and relationships with leading healthcare providers position us to compete in this market.
We believe that our long-tenured focus on the healthcare industry, extensive portfolio of solutions, motivated sales force, thought and best practice leadership, and relationships with leading healthcare providers position us to compete in this market.
Our solutions enable our clients to both satisfy patient survey compliance requirements and design experiences to build loyalty and improve the wellbeing of the people and communities they care for. 6 Table of Contents Human Capital As of December 31, 2024, we employed a total of 368 associates. None of our associates are represented by a collective bargaining unit.
Our solutions enable our customers to both satisfy patient survey compliance requirements and design experiences to build loyalty and improve the wellbeing of the people and communities they care for. Human Capital As of December 31, 2025, we employed a total of 357 associates. None of our associates are represented by a collective bargaining unit.
In this Annual Report on Form 10-K, statements regarding the value and utility of, and market demand for, our service offerings, future opportunities for growth with respect to new and existing clients, our future ability to compete and the types of firms with which we will compete, future consolidation in the healthcare industry, future adequacy of our liquidity sources, future revenue sources, future revenue, expenses, and margins, future revenue estimates used to calculate recurring contract value, the expected impact of economic factors, including interest rates and inflation, future capital expenditures including, without limitation, our headquarters renovation costs, and the timing, amount, and sources of cash to fund such capital expenditures, future stock repurchases and dividends, the expected impact of pending claims and contingencies, the future outcome of uncertain tax positions, our future use of owned and leased real property, the expected impact of the appointment of Trent Green as our Chief Executive Officer and as a director, both effective June 1, 2025, and the expected impact of global conflicts, among others, are forward-looking statements.
In this Annual Report on Form 10-K, statements regarding the value and utility of, and market demand for, our service offerings, future opportunities for growth with respect to new and existing customers, our future ability to compete and the types of firms with which we will compete, future consolidation in the healthcare industry, future adequacy of our liquidity sources, future revenue sources, future revenue, expenses, and margins, future revenue estimates used to calculate total recurring contract value, the expected impact of economic factors, including interest rates and inflation, future capital expenditures, and the timing, amount, and sources of cash to fund such capital expenditures, future stock repurchases and dividends, the expected impact of pending claims and contingencies, the future outcome of uncertain tax positions, our future use of owned and leased real property, and the expected impact of global conflicts, among others, are forward-looking statements.
We believe that there is an opportunity to drive sales growth with both existing and new clients, across all the market segments that we serve, through the introduction of new solutions. Pursue strategic acquisitions and investments. We have historically complemented our organic growth with strategic acquisitions, having completed eight such transactions since 2001.
We believe that there is an opportunity to drive sales growth with both existing and new customers, across many market segments, through the introduction of new solutions and expanded use cases. 4 Table of Contents Pursue strategic acquisitions and investments. We have historically complemented our organic growth with strategic acquisitions, having completed eight such transactions since 2001.
Based on our more than 40 years of experience, we are able to deliver unique and relevant healthcare domain expertise to the clients we serve. Established client base of leading healthcare organizations. Our client portfolio encompasses a majority of the leading healthcare systems across the United States.
Based on our nearly 45 years of experience, we are able to deliver unique and relevant healthcare domain expertise to the customers we serve. Established customer base of leading healthcare organizations. Our customer portfolio encompasses a majority of the leading healthcare systems across the United States.
Each associate is asked to take charge of their own education, self-awareness, opportunity, and growth in the topics of diversity, equity, inclusion & belonging. All leaders are expected to support associates in development efforts and be role models in inclusive behavior, leading their teams with Human Understanding®. We believe each associate and applicant should feel understood and welcomed.
Each associate is asked to take charge of their own education, self-awareness, opportunity, and growth. All leaders are expected to support associates in development efforts, leading their teams with Human Understanding®. We believe each associate and applicant should feel understood and welcomed.
Our ten largest clients collectively accounted for 17%, 15%, and 15% of our total revenue in 2024, 2023 and 2022, respectively.
Our ten largest customers collectively accounted for 20%, 17%, and 15% of our total revenue in 2025, 2024, and 2023, respectively.
Government Regulation According to the Centers for Medicare and Medicaid Services (“CMS”), health expenditures in the United States were approximately $4.9 trillion in 2023, or $14,570 per person. In total, health spending accounted for 18% of the nation’s Gross Domestic Product in 2023.
Government Regulation According to the Centers for Medicare and Medicaid Services (“CMS”), health expenditures in the United States were approximately $5.3 trillion in 2024, or $15,474 per person. In total, health spending accounted for 18% of the nation’s Gross Domestic Product in 2024.
We have no patents for most of our intellectual property. Consequently, we rely on a combination of copyright and trade secret laws and associate nondisclosure agreements to protect our systems, survey instruments and procedures.
Consequently, we rely on a combination of copyright and trade secret laws and associate nondisclosure agreements to protect our systems, survey instruments and procedures.
We partner with clients across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model. Exclusive focus on healthcare.
We partner with customers across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as the healthcare industry evolves towards a more collaborative and integrated service model. Exclusive focus on healthcare.
Market Insights is the largest U.S. healthcare consumer database of its kind, measuring the opinions and behaviors of approximately 300,000 healthcare consumers across the contiguous United States annually. Market Insights is a syndicated survey that provides clients with an independent third-party source of information that is used to understand consumer perception and preferences and optimize marketing strategies.
Market Insights is the largest U.S. healthcare consumer database of its kind, measuring the opinions and behaviors of approximately 300,000 healthcare consumers across the contiguous United States annually. Market Insights is a syndicated survey that provides customers with an independent third-party source of information that is used to evaluate market position, brand performance, and consumer choice drivers.
Over 250 of the top 400 healthcare systems based on net patient revenue are currently using one or more of our solutions. Our client base provides a unique network effect to share best practices among existing clients and to attract new clients. Our existing client base also provides a significant organic growth opportunity to upsell and cross sell additional solutions.
Over 250 of the top 400 healthcare systems based on net patient revenue are currently using one or more of our solutions. Our customer base provides a unique network effect to share best practices among existing customers and to attract new customers.
We partner with clients across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model. We have a broad and diversified client base that is distributed primarily across the United States.
We partner with customers across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as the evolving healthcare landscape drives its constituents towards a more collaborative and integrated service model. We have a broad and diversified customer base that is distributed across the United States.
We have traditionally competed with healthcare organizations’ internal marketing, market research, and/or quality improvement departments which create their own performance measurement tools, and with other research firms which provide survey-based healthcare market research and/or performance assessment.
Competition The healthcare information and market research services industry is highly competitive. We have traditionally competed with healthcare organizations’ internal marketing, market research, and/or quality improvement departments which create their own performance measurement and workflow tools, and with other firms which provide survey-based healthcare market research, performance assessment, and process improvement solutions.
Strategic campaigns and programs focus on (1) ensuring coverage of prospective clients via targeted advertising and account-based campaigns, (2) elevating client value evidence and success stories to an executive level profile, (3) engaging key stakeholders with content, programming and events and (4) amplifying thought leadership through public and media relations programs that include earning placement in national media and trade publications, securing podium presentations at key industry events, and winning awards on behalf of us and our executives. 4 Table of Contents Competition The healthcare information and market research services industry is highly competitive.
Strategic campaigns and programs focus on (1) ensuring coverage of prospective customers via targeted advertising and account-based campaigns, (2) elevating customer value and return on investment success stories to an executive level profile, (3) engaging key stakeholders with content, programming and events and (4) amplifying thought leadership through public and media relations programs that include earning placement in national media and trade publications, securing podium presentations at key industry events, and winning awards.
Our Marketing solutions provide clients with on-demand tools to measure brand value and build brand equity in their markets, evaluate and optimize advertising efficacy and consumer recall, and tailor research to obtain the real time voice of customer feedback to support branding and loyalty initiatives.
Our Market solutions provide customers with on-demand tools to measure brand value and build brand equity in their markets, evaluate, and optimize advertising efficacy and consumer recall, and tailor research to obtain voice of customer feedback to drive branding, growth, and service line initiatives.
Hrdy served as our Chief Customer Officer since January 2024, Chief Growth Officer for three years and our Senior Vice President, Customer Success, for eight years. Andy Monnich has served as our Chief Corporate Development Officer since January 2024. Mr.
Helen Hrdy was appointed as our Chief Operating Officer in October 2024. Prior to this position Ms. Hrdy served as our Chief Customer Officer since January 2024, Chief Growth Officer for three years and our Senior Vice President, Customer Success, for eight years. Andy Monnich has served as our Chief Corporate Development Officer since January 2024. Mr.
Increasing contract value with existing clients . Our growth team actively identifies and pursues cross-sell opportunities for clients to add additional solutions in order to accelerate our growth. Organic contract value growth is also realized by the increased scope of solution adoption as the size of client organizations increase from market expansion and consolidation. Adding new clients.
Increasing contract value with existing customers . Our Sales and Customer Strategy teams actively identify and pursue cross-sell opportunities for customers to add additional solutions to accelerate our growth and their success. Organic contract value growth is also realized by the increased scope of solution adoption as the size of customer organizations increases from market expansion and consolidation.
Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market.
By leveraging advanced technology and deep insights, we ensure each interaction becomes a meaningful moment of connection and care. Our ability to measure what matters most and systematically capture, analyze, and deliver insights based on self-reported information from patients, families, and consumers is critical in today’s healthcare market.
The forward-looking statements included are only made as of the date of this Annual Report on Form 10-K and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as required by the federal securities laws. 1 Table of Contents General For more than 40 years, NRC Health has led the charge to humanize healthcare and support organizations in their understanding of each unique individual.
The forward-looking statements included are only made as of the date of this Annual Report on Form 10-K and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances, except as required by the federal securities laws.
Experience solutions include patient experience, employee engagement, health risk assessments, care transition, and improvement tools. These solutions enable clients to comply with regulatory requirements and to improve their reimbursement under value-based purchasing models. More importantly, our Experience solutions provide quantitative and qualitative real-time feedback, improvement plans, and coaching insights.
Experience solutions include patient experience, insights, discharge call workflows, rounding, and other frontline enablement tools. These solutions empower our customers to comply with regulatory requirements and to improve their reimbursement under value-based purchasing models. More importantly, our Patient Experience solutions provide quantitative and qualitative feedback, improvement plans, and coaching insights.
Our Experience solutions also include tools to drive effective communication between healthcare providers and patients in the critical 24-72 hours post discharge using an automated discharge call workflow supported by our digital platform. Through preference-based communications and real-time alerts, these solutions enable organizations to identify and manage high-risk patients to reduce readmissions, increase patient satisfaction and support safe care transitions.
Our Patient Experience solutions also include tools to drive effective communication between healthcare providers and patients in the critical 24-72 hours post discharge using an automated discharge call workflow supported by our digital platform.
Highly scalable and visible revenue model . Our solutions are offered primarily through fixed price, subscription-based service agreements. The solutions we provide are also recurring in nature, which enables an ongoing relationship with our clients and favorable retention. This combination of subscription-based revenue, a base of ongoing client renewals and automated platforms creates a highly visible and scalable revenue model.
Our existing customer base also provides a significant organic growth opportunity to upsell and cross sell additional solutions. 5 Table of Contents Highly scalable and visible revenue model . Our solutions are offered primarily through fixed price, subscription-based service agreements. The solutions we provide are also recurring in nature, which enables an ongoing relationship with our customers and favorable retention.
Our star ratings tools enable our partners to publish a five-star rating metric and verified patient feedback derived from actual patient survey data to complement their online physician information. Sharing this feedback not only results in better-informed consumer decision-making but also has the ability to drive new patient acquisition and grow online physician reputation.
Our star ratings solution enables our customers to publish verified five-star reviews and comments derived from patient survey data to complement their online clinician profiles. Sharing this feedback not only results in better-informed consumer decision-making but also supports new patient acquisition and strengthens online clinician reputation.
We acknowledge that our efforts will be ongoing and must continually be re-evaluated. Available Information More information regarding NRC Health is available on our website at www.nrchealth.com. We are not including the information contained on or available through our website as part of, or incorporating such information by reference into, this Annual Report on Form 10-K.
We are not including the information contained on or available through our website as part of, or incorporating such information by reference into, this Annual Report on Form 10-K.
We focus exclusively on healthcare and serving the unique needs of healthcare organizations across the continuum, which we believe gives us a distinct competitive advantage compared to other survey and analytics software providers.
We focus exclusively on healthcare and serving the unique needs of healthcare organizations across the continuum, which we believe gives us a distinct competitive advantage compared to other analytics and software providers. Our value proposition incorporates the benefits to customers derived from our deep subject matter expertise that has been built from helping healthcare organizations for nearly 45 years.
Our digital solutions consist of four primary solution categories – Patient Experience, Consumer Experience, Employee Experience, and Market Experience –which can be implemented both collectively as an enterprise solution or individually to meet specific needs within the organization. 2 Table of Contents Market Experience Solutions – Our Marketing solutions are subscription-based services that allow for improved tracking of awareness, perception, and consistency of healthcare brands; real-time assessment of competitive differentiators; and enhanced segmentation tools to evaluate the needs, wants, and behaviors of communities through real-time competitive assessments and enhanced segmentation tools.
Market Experience Solutions – Our Market solutions are subscription-based services that allow for improved tracking of awareness, perception, and consistency of healthcare brands; assessment of competitive differentiators; and enhanced segmentation tools to evaluate the needs, wants, and behaviors of communities through competitive assessments.
At every turn Huey is there with the goal of making healthcare a more intentional and human experience for healthcare organizations and the people they serve. 3 Table of Contents The Governance Institute Our Governance solutions, branded as The Governance Institute (“TGI”), serves not-for-profit health system boards of directors, executives, and physician leadership.
Governance Solutions Our Governance Solutions, branded as The Governance Institute (“TGI”), serves not-for-profit health system boards of directors, executives, and physician leadership.
Upon the effectiveness of Mr. Green's appointment as Chief Executive Officer, Mr. Hays will transition to the role of Chairman. Resources Our success depends in part upon our data collection processes, research methods, data analysis techniques and internal systems, and procedures that we have developed specifically to serve clients in the healthcare industry.
Hays, provides significant continuity and perspective based on his 45 years of experience leading the Company. Intellectual Property Our success depends in part upon our data collection processes, research methods, data analysis techniques and internal systems, and procedures that we have developed specifically to serve customers in the healthcare industry. We have no patents for most of our intellectual property.
NRC Health’s commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship. Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market research, and emphasis on consumer preferences are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems.
Guided by its uniquely empathic heritage, NRC Health’s patient-focused approach, unmatched market and consumer preferences research, and action-oriented enablement solutions are transforming the healthcare experience, creating strong outcomes for patients and entire healthcare systems. Our expertise is Human Understanding®. We believe that every healthcare encounter is fundamentally a human experience.
Our expertise is Human Understanding®. We believe that every healthcare encounter is fundamentally a human experience. That’s why our holistic healthcare experience management framework is designed to drive the most human healthcare experiences for everyone . Patients. Consumers. Employees. Communities .
That’s why our holistic healthcare experience management framework is designed to drive the most human healthcare experiences for everyone. Patients. Consumers. Clinicians. Employees. Communities . Our comprehensive platform includes a next-generation suite of Artificial Intelligence (“AI”)-enabled products that create a natural way to collect, analyze, and deliver feedback.
Tracking, trending, and benchmarking tools isolate the key areas for process improvement allowing organizations to implement changes and reduce future readmissions. Reputation Solutions – Our Reputation solutions allow healthcare organizations to share a picture of their organization and ensure that timely and relevant content informs better consumer decision-making.
A key component of Consumer Experience is our Online Reputation solutions, which enable healthcare organizations to share an accurate and transparent picture of their performance and ensure that timely and relevant content informs better consumer decision-making.
Through actionable insights and custom research studies in just a few weeks, healthcare leaders can inform the most pressing healthcare business challenges, and identify customer behaviors, needs, expectations, and experiences to enable Human Understanding®. Huey AI - Healthcare experiences are human experiences. Huey, our AI engine built for Human Understanding®, serves as a healthcare experience management companion.
Community Insights delivers custom research studies in just a few weeks, helping healthcare leaders identify consumer behaviors, needs, expectations, and experiences. Through nGage, organizations can gather continual feedback across digital and in-person touchpoints, enabling a more complete view of the consumer journey and supporting the design experiences that advance Human Understanding®. Huey AI - Healthcare experiences are human experiences.
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Our comprehensive platform is a next-generation suite of Artificial Intelligence (“AI”)-enabled products that create a natural way to collect, analyze, and deliver feedback. By leveraging advanced technology and deep insights, we ensure each interaction becomes a meaningful moment of connection and care.
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General For nearly 45 years, NRC Health has led the charge to humanize healthcare and support organizations in their understanding of each unique individual. NRC Health’s commitment to Human Understanding® helps leading healthcare systems improve their operations through understanding each person they serve not as point-in-time insights, but as an ongoing relationship.
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Our reputation monitoring tool alerts our partners to ratings and reviews on third-party websites and provides workflows for response and service recovery. These solutions raise physician awareness of survey results and provide access to improvement resources and educational development opportunities designed to improve the way care is delivered.
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Our digital solutions consist of four primary solution categories – Patient Experience, Consumer Experience, Employee Experience, and Market Experience –which can be implemented both collectively as an enterprise solution or individually to meet specific needs within the organization.
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Employee Experience Solutions – Our Employee Experience solutions give care teams the tools to make a difference and unite around a shared sense of purpose. These tools support healthcare organizations attract and retain the best talent and give leaders the information, tools and support they need to create engagement and open communication throughout the employee lifecycle.
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Through preference-based communications and alerts, these solutions enable organizations to identify and manage high-risk patients to reduce readmissions, increase patient satisfaction, support safe care transitions, and reduce costs. Tracking, trending, and benchmarking tools isolate the key areas for process improvement allowing organizations to implement changes and reduce costly future readmissions.
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Real-time department level reporting and analytics with configurable action plans help measure improvement at every level and support next-best actions in the moment. Consumer Experience Solutions – Our Consumer Experience solutions help to reduce healthcare friction and build loyalty, to win and retain more patients.
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Employee Experience Solutions – Employee Experience is a leading indicator of patient experience. Our Employee Experience solutions combine healthcare expertise with advanced technology to strengthen that connection. Our approach includes engagement, pulse, lifecycle, Culture of Safety, and Magnet RN Satisfaction—plus employee rounding that encourages open conversations and uncovers insights beyond surveys alone.
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Our goal is to support healthcare organizations ensure that encounters beyond the clinical setting complement an exceptional care experience, rather than tarnish it. Our solutions capture feedback across the healthcare journey, drive choice to build volume, and co-design experiences and services with scalable feedback through Community Insights. Community Insights brings the voice of the consumer into strategic and operational decision-making.
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Unlike traditional platforms that take months, our solution focuses on enabling in mere weeks, empowering managers and teams with valuable feedback data while the feedback is still meaningful.
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It’s embedded in our new suite of advanced solutions on our integrated experience platform.
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By unifying patient, employee and Culture of Safety data into an actionable dashboard, leaders can also gain a holistic view that breaks down silos and uncovers patterns to improve workforce wellbeing, enhance patient safety, and drive better outcomes. 3 Table of Contents Consumer Experience Solutions – Our Consumer Experience solutions help build loyalty, support organizations in winning and retaining more patients, and reduce friction across the healthcare journey.
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Our value proposition incorporates the benefits to clients derived from our deep subject matter expertise that has been built from helping healthcare organizations over the past 40 years.
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Our review monitoring solution alerts our customers to new reviews on third-party websites and provides workflows for response and service recovery. In addition, our listings management capabilities help ensure clinician and location information remains accurate and consistent across leading consumer and healthcare websites.
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Hays, our Chief Executive Officer and President, founded NRC Health in 1981. Prior to launching the Company, Mr. Hays served as Vice President and as a Director of SRI Research Center, Inc. (now known as the Gallup Organization). Helen Hrdy was appointed as our Chief Operating Officer in October 2024. Prior to this position Ms.
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Using automation and AI-driven recommendations, the offering identifies inconsistencies, surfaces suggested updates, and enables customers to maintain a current and reliable digital presence with little manual effort. Consumer Experience also includes Community Insights and cross-journey listening through nGage, which bring scalable consumer perspectives into strategic and operational decision-making.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAt the same time, if we do not realize the expected benefits of our investments, our business, financial condition and operating results may be harmed. If we do not invest in commercially successful and innovative technologies, we may not realize the expected benefits of those investments.
Biggest changeIf we do not invest in commercially successful and innovative technologies, we may not realize the expected benefits of those investments. At the same time, if we do not realize the expected benefits of our investments, our business, financial condition and operating results may be harmed.
We could be negatively impacted by the global conflicts or similar events. Global conflicts or any expansion of such conflicts, could adversely affect our business and operations. From time-to-time we outsource certain software development services to third parties outside of the United States, including in the Ukraine.
We could be negatively impacted by global conflicts or similar events. Global conflicts or any expansion of such conflicts could adversely affect our business and operations. From time-to-time we outsource certain software development services to third parties outside of the United States, including in Ukraine.
Historically, our contractors located in areas of conflict (including in the Ukraine) have been able to continue their work. However, those services could be more negatively impacted in the future.
Historically, our contractors located in areas of conflict (including in Ukraine) have been able to continue their work. However, those services could be more negatively impacted in the future.
As a public company, we are subject to the reporting requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act Wall Street Reform and Consumer Protection Act, the listing requirements of NASDAQ and other applicable securities rules and regulations.
As a public company, we are subject to the reporting requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of NASDAQ, and other applicable securities rules and regulations.
While the risk of such similar outbreaks is unpredictable, and the extent of such risk is highly uncertain, the possibility of future outbreaks remains a risk that could have a material adverse effect on our business and it may also have the effect of heightening many of the other risks described in this Part I, Item 1A of this Form 10-K.
While the risk of such outbreaks is unpredictable, and the extent of such risk is highly uncertain, the possibility of future outbreaks remains a risk that could have a material adverse effect on our business and it may also have the effect of heightening many of the other risks described in this Part I, Item 1A of this Form 10-K.
Even if cyber-attacks or other cybersecurity breaches do not result in noncompliance with privacy or security laws, the perception that such noncompliance may have occurred by our clients or in the news media may have an adverse impact on our stock price and could result in damage to our reputation or loss of clients, which could have a material adverse effect on our business, cash flows, financial condition and results of operations.
Even if cyber-attacks or other cybersecurity breaches do not result in noncompliance with privacy or security laws, the perception that such noncompliance may have occurred by our customers or in the news media may have an adverse impact on our stock price and could result in damage to our reputation or loss of customers, which could have a material adverse effect on our business, cash flows, financial condition, and results of operations.
We have, and will continue to have, a portion of our employee population that works from home full-time or under flexible work arrangements, and we have provided associates with expanded remote network access options which enable them to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes us to additional cybersecurity risks.
We have, and expect to continue to have, a portion of our employee population that works from home full-time or under flexible work arrangements, and we have provided associates with expanded remote network access options which enable them to work outside of our corporate infrastructure and, in some cases, use their own personal devices, which exposes us to additional cybersecurity risks.
Our new solutions have a high degree of risk, as each involves strategies and technologies which we have limited or no prior development or operating experience.
Our new solutions have a high degree of risk, as each involves strategies and technologies with which we have limited or no prior development or operating experience.
If intellectual property and other proprietary information technology were copied or independently developed by our competitors, our operating results could be negatively affected. Our success depends in part upon our data collection process, research methods, data analysis techniques, and internal systems and procedures that we have developed specifically to serve clients in the healthcare industry.
If intellectual property and other proprietary information technology were copied or independently developed by our competitors, our operating results could be negatively affected. Our success depends in part upon our data collection process, research methods, data analysis techniques, and internal systems and procedures that we have developed specifically to serve customers in the healthcare industry.
We may incur higher costs to attract, train and retain these associates. Attrition in our sales and service areas can also impact our ability to retain and attract new business.
We may incur higher costs to attract, train, and retain associates. Attrition in our sales and service areas can also impact our ability to retain and attract new business.
There can be no assurance that we will continue to compete successfully against existing or new competitors. 8 Table of Contents Because our clients are concentrated in the healthcare industry, our revenue and operating results may be adversely affected by changes in regulations, a business downturn or consolidation with respect to the healthcare industry.
There can be no assurance that we will continue to compete successfully against existing or new competitors. 8 Table of Contents Because our customers are concentrated in the healthcare industry, our revenue and operating results may be adversely affected by changes in regulations, a business downturn, or consolidation with respect to the healthcare industry.
Our reputation could be adversely impacted by any of the following (whether or not valid): the failure to maintain high ethical and social standards; the failure to perform our client services in a timely manner; violations of laws and regulations; failure to adequately preserve information security; and the failure to maintain an effective system of internal controls or to provide accurate and timely financial information.
Our reputation could be adversely impacted by any of the following (whether or not valid): the failure to maintain high ethical and social standards; the failure to perform our customer services in a timely manner; violations of laws and regulations; failure to adequately preserve information security; and the failure to maintain an effective system of internal controls or to provide accurate and timely financial information.
New solution offerings involve inherent risk. We have made substantial investments to develop new solution offerings and technologies, including AI enhanced offerings. We expect to continue investing significant resources in developing new technologies, tools, features, and solutions. At the same time, our competitors are rapidly developing their technologies and services, and our offerings may not be able to compete effectively.
New solution offerings involve inherent risk. We have made substantial investments to develop new solution offerings and technologies, including AI-enabled offerings. We expect to continue investing significant resources in developing new technologies, tools, features, and solutions. At the same time, our competitors are rapidly developing their technologies and services, and our offerings may not be able to compete effectively.
Substantially all of our revenue is derived from clients in the healthcare industry. As a result, our business, financial condition and results of operations are influenced by conditions affecting this industry, including changing political, economic, competitive and regulatory influences that may affect the procurement practices and operation of healthcare providers and payers.
Substantially all of our revenue is derived from customers in the healthcare industry. As a result, our business, financial condition, and results of operations are influenced by conditions affecting this industry, including changing political, economic, competitive, and regulatory influences that may affect the procurement practices and operation of healthcare providers and payers.
In addition, we use third-party technology, systems and services for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to clients, back-office support, and other functions that in some cases involve processing, storing and transmitting large amounts of data for our business.
In addition, we use third-party technology, systems, and services for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions that in some cases involve processing, storing, and transmitting large amounts of data for our business.
Our ability to provide timely and accurate performance measurement and improvement services to our clients depends on our ability to collect large quantities of high-quality data through surveys. If survey operations are disrupted and we are unable to process surveys in a timely manner, then our revenue and net income could be negatively impacted.
Our ability to provide timely and accurate performance measurement and improvement services to our customers depends on our ability to collect large quantities of high-quality data through surveys. If survey operations are disrupted and we are unable to process surveys in a timely manner, then our revenue and net income could be negatively impacted.
In addition, this could negatively affect our operations, cause system disruptions, damage our reputation, cause client losses and contract breaches, and could also result in regulatory enforcement actions, material fines and penalties, litigation or other actions that could have a material adverse effect on our business, cash flows, financial condition and results of operations.
In addition, this could negatively affect our operations, cause system disruptions, damage our reputation, cause customer losses and contract breaches, and could also result in regulatory enforcement actions, material fines and penalties, litigation, or other actions that could have a material adverse effect on our business, cash flows, financial condition, and results of operations.
As a result, the Trust and these other entities, through the trustees or special power holders, have the power to indirectly control decisions such as whether to issue additional shares or declare and pay dividends and can control matters requiring shareholder approval, including the election of directors and the approval of significant corporate matters such as change of control transactions.
As a result, the Trust and these other entities, through the trustees or special power holders, have the power to indirectly control and significantly influence decisions such as whether to issue additional shares or declare and pay dividends and can control matters requiring shareholder approval, including the election of directors and the approval of significant corporate matters such as change of control transactions.
Risks Related to our Business We depend on contract renewals, including retention of key clients, for a large share of our revenue and our operating results could be adversely affected. We expect that a substantial portion of our revenue for the foreseeable future will continue to be derived from renewable service contracts.
Risks Related to our Business We depend on contract renewals, including retention of key customers, for a large share of our revenue and our operating results could be adversely affected. We expect that a substantial portion of our revenue for the foreseeable future will continue to be derived from renewable service contracts.
If any of these vendors cease to operate or fail to adequately perform the contracted services and alternative resources and processes are not utilized in a timely manner, our business could be adversely affected. The loss of any of our key vendors could impair our ability to perform our client services and result in lower revenues and income.
If any of these vendors cease to operate or fail to adequately perform the contracted services and alternative resources and processes are not utilized in a timely manner, our business could be adversely affected. The loss of any of our key vendors could impair our ability to perform our customer services and result in lower revenues and income.
Negative changes in general economic conditions, in the geographic areas in which we operate may reduce our profitability. An economic downturn, a rise in interest rates, and inflationary pressures can reduce the demand for our services and result in terminations as well as slower client payments or client defaults on receivables.
Negative changes in general economic conditions, in the geographic areas in which we operate may reduce our profitability. An economic downturn, a rise in interest rates, and inflationary pressures can reduce the demand for our services and result in terminations as well as slower customer payments or customer defaults on receivables.
Although we plan to continue to invest in research and development, including through acquisitions, in order to enhance our technology and new and existing solutions.
We plan to continue to invest in research and development, including through acquisitions, in order to enhance our technology and new and existing solutions.
Such trade policies and tariff implementations, and any related retaliatory trade policies and tariff implementations by foreign government may result in increased costs and worsening economic conditions and could have an adverse impact on our results of operations. 9 Table of Contents General economic factors could adversely impact our profitability.
Such trade policies and tariff implementations, and any related retaliatory trade policies and tariff implementations by foreign governments may result in increased costs and worsening economic conditions and could have an adverse impact on our results of operations. 9 Table of Contents General economic factors could adversely impact our profitability.
Our ability to provide timely and accurate performance measurement and improvement service to our clients is dependent, to a significant extent, upon the technology that we develop internally as well as the efficient and uninterrupted operation of our information technology and communication systems, and those of our external service providers.
Our ability to provide timely and accurate performance measurement and improvement service to our customers is dependent, to a significant extent, upon the technology that we develop internally as well as the efficient and uninterrupted operation of our information technology and communication systems, and those of our external service providers.
These circumstances increase the likelihood of cyber-attacks and/or security breaches. We were the target of a cyber-attack in 2020, which resulted in temporary suspension of our services to clients. One of our third-party service providers was the target of a cyber-attack in December 2022, which resulted in a temporary suspension of certain services to our clients.
These circumstances increase the likelihood of cyber-attacks and/or security breaches. We were the target of a cyber-attack in 2020, which resulted in temporary suspension of our services to customers. One of our third-party service providers was the target of a cyber-attack in December 2022, which resulted in a temporary suspension of certain services to our customers.
Investment in the enhancement of existing and development of new information technology processes is costly and affects our ability to successfully serve our clients. The failure or deficiency of the technology we develop and implement could negatively impact the willingness or ability for our clients to use our services and our ability to perform our services.
Investment in the enhancement of existing and development of new information technology processes is costly and affects our ability to successfully serve our customers. The failure or deficiency of the technology we develop and implement could negatively impact the willingness or ability for our customers to use our services and our ability to perform our services.
Our failure to anticipate clients’ expectations and needs, adapt to emerging technological trends, or design efficient and effective information technology platforms, could result in lower utilization, loss of customers, damage to customer relationships, reduced revenue and profits, refunds to customers and damage to our reputation.
Our failure to anticipate customers’ expectations and needs, adapt to emerging technological trends, or design efficient and effective information technology platforms, could result in lower utilization, loss of customers, damage to customer relationships, reduced revenue and profits, refunds to customers, and damage to our reputation.
As of February 28, 2025, approximately 37.5% of our outstanding common stock was owned by the Trust and approximately 46.8% of our outstanding common stock was held by the Trust and other entities controlled by trustees or special power holders for the benefit of members of Mr. Hays’ family.
As of February 28, 2026, approximately 37.5% of our outstanding common stock was owned by the Trust and approximately 46.8% of our outstanding common stock was held by the Trust and other entities controlled by trustees or special power holders for the benefit of members of Mr. Hays’ family.
Such cyber-attacks may subject us to litigation and regulatory risk, civil and criminal penalties, additional costs and diversion of management attention due to investigation, remediation efforts and engagement of third-party consultants and legal counsel in connection with such incidents, payment of “ransoms” to regain access to our systems and information, loss of clients, damage to client relationships, reduced revenue and profits, refunds of client charges and damage to our reputation, any of which could have a material adverse effect on our business, cash flows, financial condition and results of operations.
Such cyber-attacks may subject us to litigation and regulatory risk, civil and criminal penalties, additional costs and diversion of management attention due to investigation, remediation efforts and engagement of third-party consultants and legal counsel in connection with such incidents, payment of “ransoms” to regain access to our systems and information, loss of customers, damage to customer relationships, reduced revenue and profits, refunds of customer charges, and damage to our reputation, any of which could have a material adverse effect on our business, cash flows, financial condition, and results of operations.
Damage to our reputation or loss of our clients’ confidence in our services for any of these, or any other reasons, could adversely impact our business, revenues, financial condition, and results of operations, as well as require additional resources to rebuild our reputation.
Damage to our reputation or loss of our customers’ confidence in our services for any of these, or any other reasons, could adversely impact our business, revenues, financial condition, and results of operations, as well as require additional resources to rebuild our reputation.
Our primary competitors include Press Ganey and Qualtrics, both of which we believe has significantly higher annual revenue than us, and several other firms that provide similar services in the market we serve.
Our primary competitors include Press Ganey and Qualtrics, both of which we believe have significantly higher annual revenue than us, and several other firms that provide similar services in the market we serve.
The healthcare industry is extensively regulated by both state and federal government. Future legislative changes, including additional provisions to control healthcare costs, improve healthcare quality and expand access to health insurance, could result in lower reimbursement rates and otherwise change the environment in which providers and payers operate. Recently, members of the U.S.
The healthcare industry is extensively regulated by both state and federal government. Future legislative changes, including additional provisions to control healthcare costs, improve healthcare quality, and expand access to health insurance, could result in lower reimbursement rates and otherwise change the environment in which providers and payers operate. From time-to-time, members of the U.S.
We are required through our contracts with our clients and by HIPAA to protect the privacy and security of certain health information and to make certain disclosures to our clients or to the public if this information is unlawfully accessed.
We are required through our contracts with our customers and by HIPAA to protect the privacy and security of certain health information and to make certain disclosures to our customers or to the public if this information is unlawfully accessed.
We believe that the increased number of employees working remotely has incrementally increased our cyber risk profile, but we are unable to predict the extent or impacts of those risks at this time.
We believe that the increased number of employees working remotely has incrementally increased our cyber risk profile, but we are unable to predict the extent or impact of those risks at this time.
The market price and trading volume of our common stock has historically been and may continue to be highly volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases that are in response to factors beyond our control, including, but not limited to: ● Variations in our financial performance and that of similar companies; ● Regulatory and other developments that may impact the demand for our services; ● Reaction to our press releases, public announcements and filings with the SEC; ● Client, market and industry perception of our services and performance; ● Actions of our competitors; ● Changes in earnings estimates or recommendations by analysts who follow our stock; ● Loss of key personnel; ● Investor, management team or large shareholder sales of our stock; ● Changes in accounting principles; and ● Variations in general market, economic and political conditions or financial markets.
The market price and trading volume of our common stock has historically been and may continue to be highly volatile, and investors in our common stock may experience a decrease in the value of their shares, including decreases that are in response to factors beyond our control, including, but not limited to: ● Variations in our financial performance and that of similar companies; ● Regulatory and other developments that may impact the demand for our services; ● Reaction to our press releases, public announcements, and filings with the SEC; ● Customer, market, and industry perception of our services and performance; ● Actions of our competitors; ● Changes in earnings estimates or recommendations by analysts who follow our stock; ● Loss of key personnel; ● Investor, management team, or large shareholder sales of our stock; ● Low trading volumes, which may increase volatility; ● Changes in accounting principles; and ● Variations in general market, economic, and political conditions or financial markets.
We outsource certain operations and engage third parties to perform work needed to fulfill our client services. For example, we use vendors to perform certain outreach and data collection services related to our survey operations.
We outsource certain operations and engage third parties to perform work needed to fulfill our customer services. For example, we use vendors to perform certain outreach and data collection services related to our survey operations.
However, over the years Mr. Hays, for estate planning purposes, gifted and/or transferred almost all of his directly owned shares to trusts for the benefit of his family. Currently, the principal holder of shares previously owned by Mr. Hays is the Common Property Trust (the “Trust”).
Hays, for estate planning purposes, gifted and/or transferred almost all of his directly owned shares to trusts for the benefit of his family. Currently, the principal holder of shares previously owned by Mr. Hays is the Common Property Trust (the “Trust”).
In addition, the service needs of our clients are affected by accreditation requirements, enrollment in managed care plans, the level of use of satisfaction measures in healthcare organizations’ overall management and compensation programs, the size of operating budgets, clients’ operating performance, industry and economic conditions, and changes in management or ownership.
In addition, the service needs of our customers are affected by accreditation requirements, enrollment in managed care plans, the level of use of satisfaction measures in healthcare organizations’ overall management and compensation programs, the size of operating budgets, customers’ operating performance, industry and economic conditions, and changes in management or ownership.
For example, recent years have seen an increase in the development or enforcement of legislation related to healthcare reform, privacy, trade compliance and anti-corruption. Additionally, some of the services we provide include information our clients need to fulfill regulatory reporting requirements.
For example, recent years have seen an increase in the development or enforcement of legislation related to healthcare reform, privacy, and trade compliance. Additionally, some of the services we provide include information our customers need to fulfill regulatory reporting requirements.
Our overall operating results may fluctuate as a result of a variety of factors, including the size and timing of orders from clients, client demand for our services (which, in turn, is affected by factors such as accreditation requirements, enrollment in managed care plans, operating budgets and clients’ operating performance), the hiring and training of additional staff, expense increases, and industry and general economic conditions.
Our overall operating results may fluctuate as a result of a variety of factors, including the size and timing of orders from customers, customer demand for our services (which, in turn, is affected by factors such as accreditation requirements, enrollment in managed care plans, operating budgets, and customers’ operating performance), the hiring and training of additional staff, expense increases, and industry and general economic conditions.
In order to expand services or technologies to existing clients and increase our client base, we have historically, and may in the future, make strategic business acquisitions, partnerships with other organizations and/or investments that we believe complement our business.
In order to expand services or technologies to existing customers and increase our customer base, we have historically, and may in the future, make strategic business acquisitions, partnerships with other organizations, and/or investments that we believe complement our business.
Acquisitions have inherent risks which may have material adverse effects on our business, financial condition, or results of operations, including, among other things: (1) failure to successfully integrate the purchased operations, technologies, products or services and maintain uniform standard controls, policies and procedures; (2) substantial unanticipated integration costs; (3) loss of key associates including those of the acquired business; (4) diversion of management’s attention from other operations; (5) failure to retain the customers of the acquired business; (6) failure to achieve any projected synergies and performance targets; (7) additional debt and/or assumption of known or unknown liabilities; (8) dilutive issuances of equity securities; and (9) a write-off of goodwill, software development costs, client lists, other intangibles and amortization of expenses.
Acquisitions have inherent risks which may have material adverse effects on our business, financial condition, or results of operations, including, among other things: (1) failure to successfully integrate the purchased operations, technologies, products, or services and maintain uniform standard controls, policies, and procedures; (2) substantial unanticipated integration costs; (3) loss of key associates including those of the acquired business; (4) diversion of management’s attention from other operations; (5) failure to retain the customers of the acquired business; (6) failure to achieve any projected synergies and performance targets; (7) additional debt and/or assumption of known or unknown liabilities; (8) dilutive issuances of equity securities; (9) a write-off of goodwill, software development costs, customer lists, other intangibles and amortization of expenses; and (10) an acquisition target may have differing or inadequate cybersecurity, data protection, or financial reporting.
In connection with our client services, we and our third-party service providers receive, process, store and transmit sensitive business information and, in certain circumstances, personal medical information of our clients’ patients, electronically over the internet.
In connection with our customer services, we and our third-party service providers receive, process, store, and transmit sensitive business information and, in certain circumstances, personal medical information of our customers’ patients, electronically over the internet.
If our services result in errors or omissions in our clients’ regulatory reporting, we may be subject to loss of clients, reputational harm or litigation, each potentially adversely impacting our business.
If our services result in errors or omissions in our customers’ regulatory reporting, we may be subject to loss of customers, reputational harm, or litigation, each potentially adversely impacting our business.
Consolidation in this industry, including the potential acquisition of certain of our clients, could adversely affect aggregate client budgets for our services, could result in clients performing more marketing, market research and/or quality improvement functions internally or could result in the termination of a client’s relationship with us.
Consolidation in this industry, including the potential acquisition of certain of our customers, could adversely affect aggregate customer budgets for our services, could result in customers performing more marketing, market research and/or quality improvement functions internally, or could result in the termination of a customer’s relationship with us.
Additionally, in recent years, we experienced increased costs including salary and benefits costs in sales and client support, software costs, contracted services, costs associated with our building improvements and equipment purchases and we expect inflationary pressures to continue in 2025.
Additionally, in recent years, we experienced increased costs, including salary and benefits costs, software costs, contracted services, costs associated with our building improvements, and equipment purchases, and we expect inflationary pressures to continue in 2026.
Civil unrest, political instability or uncertainty, military activities (including the conflicts in the Ukraine and the Middle East, and as a result of any escalation of tensions between China and Taiwan), utility service breakdowns or broad-based sanctions, should they continue for the long term or escalate, could interrupt our contractors’ ability to provide services and require our associates to perform the services or replace the contractors which could have an adverse effect on our operations and financial performance, including higher volatility in foreign currency exchange rates, increased use of less cost-efficient resources and negative impacts to our business resulting from deteriorating general economic conditions.
Civil unrest, political instability or uncertainty, military activities, utility service breakdowns, or broad-based sanctions, should they continue for the long term or escalate, could interrupt our contractors’ ability to provide services and require our associates to perform the services or replace the contractors which could have an adverse effect on our operations and financial performance, including higher volatility in foreign currency exchange rates, increased use of less cost-efficient resources and negative impacts to our business resulting from deteriorating general economic conditions.
Although only a few of these competitors have offered specific services that compete directly with our services, many of these competitors have substantially greater financial, information gathering, and marketing resources than us and could decide to increase their resource commitments to our market.
Although only a few of these competitors have offered specific services that compete directly with our services, many of these competitors have substantially greater financial, information gathering, and marketing resources than us and could decide to increase their resource commitments to our market. Our competitors may increase their resources through organic growth, as well as consolidation with other competitors.
Our overall effective income tax rate is a function of the federal and local tax rates and the geographic mix of our income before taxes in the jurisdictions in which we operate. The new administration has indicated a desire to amend the federal tax laws. Changes in tax rates could negatively impact our net income.
Our overall effective income tax rate is a function of the federal and local tax rates and the geographic mix of our income before taxes in the jurisdictions in which we operate. The U.S. administration and certain members of Congress have indicated a desire to amend the federal tax laws. Changes in tax rates could negatively impact our net income.
House of Representatives have started to weigh a series of legislative proposals targeting Medicaid, Medicare, and other entitlement programs as part of a broader campaign to reduce federal spending, President Trump has issued a number of executive orders intended to reduce government spending, and we expect there will be continued proposals targeting reimbursement methodologies and the number of individuals eligible for government healthcare programs.
House of Representatives have weighed legislative proposals targeting Medicaid, Medicare, and other entitlement programs as part of broader campaigns to reduce federal spending, a number of executive orders have been issued intended to reduce government spending, and we expect there will be continued proposals targeting reimbursement methodologies and the number of individuals eligible for government healthcare programs.
Hays, our Chief Executive Officer and President, or one or more of our other executive officers, could have a material adverse effect, at least in the short to medium term, on most significant aspects of our business, including strategic planning, product development, and sales and customer relations.
Although customer relationships are managed at many levels within our company, the loss of the services of Trent Green, our Chief Executive Officer, or one or more of our other executive officers or Chairman, could have a material adverse effect, at least in the short to medium term, on most significant aspects of our business, including strategic planning, product development, sales, and customer relations.
The impact of these developments on the healthcare industry is difficult to predict and could have an adverse effect on our revenue and a corresponding effect on our operating and net income. We could be negatively impacted by outbreaks or pandemics. In May 2023, the federal government lifted its Federal Public Health Emergency Declaration related to COVID-19.
The impact of these developments on the healthcare industry is difficult to predict and could have an adverse effect on our revenue and a corresponding effect on our operating and net income. We could be negatively impacted by outbreaks or pandemics.
We have security technologies, processes and procedures in place to protect against cybersecurity risks and security breaches. However, hardware, software or applications we develop or procure from third parties may contain defects in design, manufacturer defects or other problems that could unexpectedly compromise information security.
However, hardware, software, or applications we develop or procure from third parties may contain defects in design, manufacturer defects, or other problems that could unexpectedly compromise information security.
Further, we cannot predict the impact of the military actions and any heightened military conflict or geopolitical instability that may follow, including additional sanctions or countersanctions, heightened inflation, cyber disruptions or attacks, higher energy costs, and supply chain disruptions.
Further, we cannot predict the impact of the military actions and any heightened military conflict or geopolitical instability that may follow, including additional sanctions or countersanctions, heightened inflation, cyber disruptions or attacks, higher energy costs, and supply chain disruptions. In addition, the new administration has imposed new or increased tariff rates on imported goods from a number of countries.
Furthermore, we expect competition for qualified personnel to become more intense as competition in our industry increases. We cannot assure you that we will be able to recruit, retain and motivate a sufficient number of qualified personnel to compete successfully. While we expect Mr.
Furthermore, we expect competition for qualified personnel to become more intense as competition in our industry increases. We cannot assure you that we will be able to recruit, retain, and motivate a sufficient number of qualified personnel to compete successfully. 15 Table of Contents Like many other companies, we experienced higher attrition rates in the last several years.
However, the continued spread of COVID-19, including its variants, together with any other outbreak of other contagious diseases or public heath environments could adversely affect our business, results of operations, financial condition, and stock price.
Any outbreak of contagious diseases, such as COVID-19 or its variants, or adverse public heath environments could negatively affect our business, results of operations, financial condition, and stock price.
We rely on a limited number of key clients for a substantial portion of our revenue. Our ten largest clients collectively accounted for 17%, 15%, and 15% of our total revenue in 2024, 2023 and 2022, respectively.
To the extent that customers fail to renew or defer their renewals, our results may be materially adversely affected. We rely on a limited number of key customers for a substantial portion of our revenue. Our ten largest customers collectively accounted for 20%, 17%, and 15% of our total revenue in 2025, 2024, and 2023, respectively.
If we are unsuccessful in increasing our revenue or we do not reduce costs sufficiently, our margins will continue to be compressed. Risks Related to our Common Stock Our principal shareholders effectively control the Company. A majority of our common stock and voting power was historically owned and/or held by Michael D. Hays, our Chief Executive Officer and President.
Risks Related to our Common Stock Our principal shareholders effectively control the Company. A majority of our common stock and voting power was historically owned and/or held by Michael D. Hays, our Chairman of the Board. However, over the years Mr.
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The majority of our contracts are renewable annually at the option of our clients. Client contracts are generally cancelable on short notice without penalty; however we are entitled to payment for services through the cancellation date. To the extent that clients fail to renew or defer their renewals, we anticipate our results may be materially adversely affected.
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Some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to the factors, events or contingencies that could materially and adversely affect us in the future.
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In addition, the new administration has stated its intention to impose new or increased tariff rates on imported goods from a number of countries, including China, Canada, Mexico, and the EU.
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The use of AI by bad actors may make cyber-attacks more difficult to anticipate or detect. We have security technologies, processes, and procedures in place to protect against cybersecurity risks and security breaches.
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Our revenue and margins have decreased in recent years. We have invested in product development, leadership and recruiting in an effort to increase revenue. During the second quarter of 2025 we expect to recognize compensation expense of $4.9 million (based on the price of our common stock on February 28, 2025) for Mr. Green's signing bonus.
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Our revenue and margins have decreased in recent years. We have invested in product development, sales, and leadership in an effort to increase revenue. We have also adjusted spending in certain areas to reduce costs. If we are unsuccessful in increasing our revenue or we do not reduce costs sufficiently, our margins will continue to be compressed.
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In addition, we expect to recognize compensation expense of approximately $608,000 (based on the price of our common stock on February 28, 2025) per quarter for Mr. Green's equity grant beginning in June 2025 and continuing through the third anniversary of the grant. In light of Mr.
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Green's hiring and compensation, we expect to terminate the existing long-term incentive program for our executive leadership team with the consent of the impacted participants and adopt a new incentive program during the second quarter of 2025, which could result in additional expenses. We have also adjusted spending in certain areas to reduce costs.
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Although client relationships are managed at many levels within our company, the loss of the services of Michael D.
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Green will begin serving as our Chief Executive Officer and as a director on June 1, 2025, his start date may be delayed or may never occur.
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In December 2024, Linda Stacy left her position as our Principal Accounting Officer, in January 2025, Christophe Louvion, left his position as our Chief Product Technology Officer, and in March 2025, Jason Hahn left his position as Chief Revenue Officer. While Ms.
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Stacy has been temporarily appointed as Interim Principal Financial Officer, these departures or departures of other key executive may result in lack of continuity, operational issues and we may not realize the expected benefits and results from compensation structures we have put in place. 15 Table of Contents Like many other companies, we experienced higher attrition rates in the last several years.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeShe graduated from Rochester Institute of Technology (RIT) with an eMBA and a master’s in science in IT Security. She earned her paralegal certificate from Stony Brook University and holds several industry certifications. Ms. Spencer is also an adjunct professor at RIT, the University of Virginia and the Blue Ridge Virginia Governor's School.
Biggest changeOur VP Privacy has over twenty years of experience in cybersecurity, privacy, and compliance, with an eMBA and a master’s in science in IT Security from the Rochester Institute of Technology, as well as several industry certifications.
Annually, we engage independent auditors to issue a System and Organization Control (SOC) 2 - Type II report based on their examination of our critical systems used to provide services to our clients for the suitability of design and operating effectiveness of controls.
Annually, we engage independent auditors to issue a System and Organization Control (SOC) 2 - Type II report based on their examination of our critical systems used to provide services to our customers for the suitability of design and operating effectiveness of controls.
Our Vice President of Privacy Compliance also reports to the Audit Committee on a regular basis, providing an Information Security Report, which includes information such as our information system risk profile, our top risk challenges, and security initiatives and strategies. Additionally, the ERMC communicates emerging risks and the mitigation of those risks to the Audit Committee, among other things.
Our Vice President of Privacy Compliance (VP of Privacy) also reports to the Audit Committee on a regular basis, providing an Information Security Report, which includes information such as our information system risk profile, our top risk challenges, and security initiatives and strategies.
Additionally, our subcontractor agreements require that they report any security incidents. Risk assessment results and recommendations are documented in our risk register, reported, and closely monitored by our security team.
Risk assessment results and recommendations are documented in our risk register, reported, and closely monitored by our security team.
Significant cybersecurity matters, and strategic risk management decisions are elevated to the overall Board of Directors to enable oversight and guidance on critical cybersecurity issues. 17 Table of Contents Our Vice President of Privacy Compliance, Jen Spencer, is an ERMC member and has primary responsibility for our Information Security Program, including the maintenance and enforcement of our security policies. Ms.
Significant cybersecurity matters and strategic risk management decisions are elevated to the overall Board of Directors to enable oversight and guidance on critical cybersecurity issues. 17 Table of Contents Our VP Privacy is an ERMC member and has primary responsibility for our Information Security Program, including the maintenance and enforcement of our security policies, overseeing and executing the strategic plan for our data protection program, conducting organizational-wide training, advising our leadership team, and assisting in optimizing security measures, mitigating risks, fortifying defenses, and minimizing vulnerabilities.
Item 1C. Cybersecurity We have a robust information security program to safeguard our information and systems as well as third parties that create, receive, or transmit our information or are critical to our operations.
Item 1C. Cybersecurity We maintain an information security program grounded in the HITRUST, NIST, and ISO frameworks to safeguard our information and systems and to support the security of third parties that create, receive, transmit, or have access to our information, or that are critical to our operations.
A cybersecurity incident impacting us or our subcontractors could materially adversely affect our performance and results of operations. For more information on about the cybersecurity risks we face, see the factors set forth under the caption “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.
For more information about the cybersecurity risks we face, see the factors set forth under the caption “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. Our cybersecurity risk management procedures encompass comprehensive administrative, technical, and physical security measures.
We utilize both internal tools and third -party resources to perform risk and vulnerability assessments, as well as penetration testing. This includes a comprehensive managed security service that operates 24/7, dedicated to scanning and analyzing potential threats. Our Contractors and Third Parties Policy requires certain vendors to undergo annual reviews including security assessments and site visits.
This includes a comprehensive managed security service that operates 24/7, dedicated to scanning and analyzing potential threats. Our Contractors and Third Parties Policy require certain vendors to undergo annual reviews including security assessments and site visits. Additionally, our subcontractor agreements require that they report any security incidents.
Our cybersecurity risk management procedures encompass comprehensive administrative, technical, and physical security measures. Our Security Team meets, subscribes to intelligence sources, and actively participates in professional organizations to stay informed and have reliable access to the latest information on emerging threats and vulnerabilities.
Our Security Team meets, subscribes to intelligence sources, and actively participates in professional organizations to stay informed and have reliable access to the latest information on emerging threats and vulnerabilities. We utilize both internal tools and third-party resources to perform risk and vulnerability assessments, as well as penetration testing.
Risk management & strategy Our information security program, including cybersecurity risk management is integrated into our overall Enterprise Risk Management Program (“ERMP”) framework. Our ERMP assesses strategic, operational, and environmental factors to identify key and emerging risks across the organization including cybersecurity risks.
Our ERMP assesses strategic, operational, and environmental factors to identify key and emerging risks across the organization including cybersecurity risks. A key risk matrix is maintained to evaluate the potential impact of key risks and monitor the effectiveness of mitigation and controls.
A key risk matrix is maintained to evaluate the potential impact of key risks and monitor the effectiveness of mitigation and controls. We, our customers, suppliers, and subcontractors face cybersecurity risks such as phishing, ransomware, zero-day exploits, malware attacks, and social engineering attacks.
We, our customers, suppliers, and subcontractors face cybersecurity risks such as phishing, ransomware, zero-day exploits, malware attacks, and social engineering attacks. A cybersecurity incident impacting us or our subcontractors could materially adversely affect our performance and results of operations.
Her primary job responsibilities include security, privacy, and compliance including AI data governance. Ms. Spencer works on several working groups through H-ISAC, Women in Bio, and Women in AI Governance. Prior to NRC she was the CIO/CISO/CPO for the Rochester RHIO and Manager of Information Security and GRC with Excellus Health Plan.
Prior to NRC Health, our VP Privacy was the CIO/CISO/CPO for the Rochester RHIO and Manager of Information Security and GRC with Excellus Health Plan.
She is responsible for overseeing and executing the strategic plan for our data protection program, information security systems, compliance, computer networks and business continuance/disaster recovery. Additionally, Ms. Spencer actively participates in project management duties and manages information security integration efforts, working closely with internal teams, vendors, subcontractors, and clients. Ms. Spencer has over twenty years in cybersecurity, privacy, and compliance.
Additionally, the VP Privacy actively participates in project management duties and manages information security integration efforts, working closely with internal teams, vendors, subcontractors, and customers.
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The controls within the program are constantly updated to adapt to technological advancements, regulatory changes, and operational needs, ensuring that we uphold our strict standards and unwavering commitment to maintaining confidentiality, integrity, and availability of our valuable information assets.
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Our controls are periodically reviewed and updated to address technological developments, evolving regulatory requirements, and operational needs, reflecting our ongoing focus on the confidentiality, integrity, and availability of our information assets. During the fourth quarter of 2025, NRC obtained HITRUST i1 and AI Security certifications, including completion of the AI Risk Management Framework (RMF) Insight Report.
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Spencer serves as an advisor to our leadership team, assisting them in optimizing security measures, mitigating risk, fortifying defenses, and minimizing vulnerabilities. Ms. Spencer develops written policies and procedures and conducts training to ensure our entire organization is well-protected.
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These third-party assessments form part of the Company’s cybersecurity risk management processes and are used, together with other industry standards, to inform the design of controls and to support ongoing evaluation of cybersecurity and data protection practices. Risk management & strategy Our information security program, including cybersecurity risk management, is integrated into our overall Enterprise Risk Management Program (“ERMP”) framework.
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Additionally, the ERMC communicates emerging risks and the mitigation of those risks to the Audit Committee, among other things.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe are currently renovating the building and expect renovations to be complete in 2025.We are leasing 19,300 square feet of space in Lincoln, Nebraska for our mail survey processing operations that were previously housed at our headquarters.
Biggest changeWe are leasing 19,300 square feet of space in Lincoln, Nebraska for our mail survey processing operations that were previously housed at our headquarters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn May 2022, our Board of Directors authorized the repurchase of 2,500,000 shares of common stock (the “2022 Program”). The 2022 Program has no set expiration date. The table below summarizes repurchases of common stock during the three-month period ended December 31, 2024.
Biggest changeIn April 2025, our Board of Directors authorized the repurchase of 1.0 million shares of common stock (the “2025 Program”). All 1.0 million shares were repurchased under this authorization by September 30, 2025. There were no repurchases of common stock during the three-month period ended December 31, 2025.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2019, and our relative performance is tracked through December 31, 2024.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each of the indexes on December 31, 2020, and our relative performance is tracked through December 31, 2025.
The payment and amount of future dividends, if any, is at the discretion of our Board of Directors and will depend on our future earnings, financial condition, general business conditions, alternative uses of our earnings and cash and other factors. On February 28, 2025, there were approximately 10 shareholders of record and approximately 13,981 beneficial owners of our common stock.
The payment and amount of future dividends, if any, is at the discretion of our Board of Directors and will depend on our future earnings, financial condition, general business conditions, alternative uses of our earnings and cash and other factors. On February 28, 2026, there were approximately 10 shareholders of record and approximately 12,697 beneficial owners of our common stock.
Cash dividends in the aggregate amount of $11.3 million, $36.3 million, and $20.9 million were declared in 2024, 2023 and 2022 respectively.
Cash dividends in the aggregate amount of $11.8 million, $11.3 million, and $36.3 million were declared in 2025, 2024, and 2023 respectively.
The stock price performance included in this graph is not necessarily indicative of future stock price performance. 12/19 12/20 12/21 12/22 12/23 12/24 National Research Corporation Common Stock 100.00 65.14 63.94 58.70 64.34 29.28 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 Russell 2000 100.00 119.96 137.74 109.59 128.14 142.93
The stock price performance included in this graph is not necessarily indicative of future stock price performance. 12/20 12/21 12/22 12/23 12/24 12/25 National Research Corporation Common Stock 100.00 98.17 90.11 98.77 44.95 49.49 NASDAQ Composite 100.00 122.18 82.43 119.22 154.48 187.14 Russell 2000 100.00 114.82 91.35 106.82 119.14 134.40
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Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number Of Shares that May Yet Be Purchased Under the Plans or Programs Oct 1 – Oct 31, 2024 24,186 18.18 24,186 676,447 Nov 1 – Nov 30, 2024 114,762 18.84 114,762 561,685 Dec 1 – Dec 31, 2024 253,976 18.28 253,976 307,709 Total 392,924 392,924 (1) The average price paid per share includes commission paid on stock repurchases and excludes excise tax incurred on stock repurchases.
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For the quarter ended December 31, 2024, commission paid totaled $7,858 and excise tax expense totaled $72,452. (2) Shares were repurchased pursuant to the 2022 program.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(In thousands, except percentages) Year Ended December 31, Percentage Increase (Decrease) 2024 2023 2022 2024 over 2023 2023 over 2022 Revenue $ 143,060 $ 148,580 $ 151,568 (4 ) (2 ) Direct expenses 56,933 56,015 57,049 2 (2 ) Selling, general, and administrative 44,911 46,621 42,699 (4 ) 9 Depreciation, amortization and impairment 6,022 5,899 5,277 2 12 Operating income 35,194 40,045 46,543 (12 ) (14 ) Total other income (expense) (2,504 ) (83 ) (3,728 ) 2,917 (98 ) Provision for income taxes 7,907 8,991 11,015 (12 ) (18 ) Effective Tax Rate 24 % 22 % 26 % (2 ) (4 ) Operating Margin 25 % 27 % 31 % (2 ) (4 ) Recurring Contract Value 133,218 141,855 146,839 (6 ) (3 ) Cash provided by operating activities 34,625 38,113 36,265 (10 ) 5 Revenue.
Biggest change(In thousands, except percentages) Year Ended December 31, Percentage Increase (Decrease) 2025 2024 2023 2025 over 2024 2024 over 2023 Revenue $ 137,390 $ 143,060 $ 148,580 (4 ) (4 ) Direct expenses 52,371 56,933 56,015 (8 ) 2 Selling, general, and administrative 54,805 44,911 46,621 22 (4 ) Depreciation and amortization 7,624 6,022 5,899 27 2 Operating income 22,590 35,194 40,045 (36 ) (12 ) Total other expense (4,745 ) (2,504 ) (83 ) 89 2,917 Provision for income taxes 6,245 7,907 8,991 (21 ) (12 ) Effective Tax Rate 35 % 24 % 22 % 11 2 Operating Margin 16 % 25 % 27 % (9 ) (2 ) Total Recurring Contract Value 144,143 133,218 141,855 8 (6 ) Cash provided by operating activities 26,450 34,625 38,113 (24 ) (10 ) Total Recurring Contact Value (TRCV) .
We are obligated to pay ongoing unused commitment fees quarterly in arrears at a percentage per annum determined by our cash flow leverage ratio, ranging from 0.15% to 0.30%, based on the actual daily unused portions of the Revolving Loan and the New Delayed Draw Term Loan, respectively.
We are obligated to pay ongoing unused commitment fees quarterly in arrears at a percentage per annum determined by our cash flow leverage ratio, ranging from 0.15% to 0.30%, based on the actual daily unused portions of the Revolving Loan and the Delayed Draw Term Loan, respectively.
Principal amounts outstanding under the New Delayed Draw Term Loan are due and payable monthly during the term of the New Delayed Draw Term Loan, in equal monthly installments to amortize the aggregate outstanding principal balance by (i) 5% during each of the first three years and (ii) 7.5% during each of the fourth and fifth years following the date of such loan.
Principal amounts outstanding under the Delayed Draw Term Loan are due and payable monthly during the term of the Delayed Draw Term Loan, in equal monthly installments to amortize the aggregate outstanding principal balance by (i) 5% during each of the first three years and (ii) 7.5% during each of the fourth and fifth years following the date of such loan.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
There is a lag between changes in TRCV (next twelve months) and revenue (trailing twelve months). Generally, if we are able to sustain growth in TRCV, we would expect revenue growth to follow within the next few quarters (and vice versa). However, intervening events may affect this general expectation. Direct expenses .
There is a lag between changes in TRCV (next twelve months) and revenue (trailing twelve months). Generally, if we are able to sustain growth in TRCV, we would expect revenue growth to follow within the next few quarters (and vice versa). However, intervening events may affect this general expectation.
Our end-to-end solutions enable our clients to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships.
Our end-to-end solutions enable our customers to understand what matters most to each person they serve – before, during, after, and beyond clinical encounters – to gain a longitudinal understanding of how life and health intersect, with the goal of developing lasting, trusting relationships.
Notwithstanding our working capital deficit on December 31, 2024, we believe that our existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet our projected capital and debt maturity needs for the foreseeable future.
Notwithstanding our working capital deficit on December 31, 2025, we believe that our existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet our projected capital and debt maturity needs for the foreseeable future.
Our cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred income taxes, share-based compensation and related taxes, reserve for uncertain tax positions, change in fair value of contingent consideration, loss on disposal of property and equipment and the effect of working capital changes.
Our cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred income taxes, share-based compensation and related taxes, reserve for uncertain tax positions, change in fair value of contingent consideration, amortization of debt issuance costs, loss on disposal of property and equipment, and the effect of working capital changes.
The New Delayed Draw Term Loan includes an accordion feature that, so long as no event of default exists or would exist after giving effect to such increase, allows us to request an increase in the New Delayed Draw Term Loan of up to the lesser of (x) $25,000,000 and (y) our EBITDA as of the preceding four fiscal quarters, exercisable in increments of $10,000,000 (or the remaining available amount of the accordion, if less).
The Delayed Draw Term Loan includes an accordion feature that, so long as no event of default exists or would exist after giving effect to such increase, allows us to request an increase in the Delayed Draw Term Loan of up to the lesser of (x) $25.0 million and (y) our EBITDA as of the preceding four fiscal quarters, exercisable in increments of $10.0 million (or the remaining available amount of the accordion, if less).
Our revenue recognition policy requires management to estimate, among other factors, the future contract consideration we expect to receive under variable consideration subscription arrangements as well as future total estimated contract costs over the contract term with respect to fixed, non-subscription arrangements.
We also derive revenue from fixed, non-subscription arrangements. Our revenue recognition policy requires management to estimate, among other factors, the future contract consideration we expect to receive under variable consideration subscription arrangements as well as future total estimated contract costs over the contract term with respect to fixed, non-subscription arrangements.
We also used cash to repurchase shares of our common stock for treasury, to pay dividends on common stock and for payment of payroll tax withholdings on options exercised. This was partially offset by cash provided from borrowings on the Line of Credit and Delayed Draw Down Term loan.
We also used cash to repurchase shares of our common stock for treasury, to pay dividends on common stock and for payment of payroll tax withholdings on options exercised. This was partially offset by cash provided from borrowings on the Revolving Loan and Delayed Draw Term loan.
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Overview Our purpose is to humanize healthcare and support organizations in their understanding of each unique individual. Our commitment to Human Understanding® helps leading healthcare systems get to know each person they serve not as point-in-time insights, but as an ongoing relationship.
Overview Our purpose is to humanize healthcare and support organizations in their understanding of each unique individual. Our commitment to Human Understanding® helps leading healthcare systems improve their operations through understanding each person they serve not as point-in-time insights, but as an ongoing relationship.
Our material cash requirements include the following contractual and other obligations: Dividends Cash dividends in the aggregate amount of $11.3 million, $36.3 million and $20.9 million were declared in 2024, 2023 and 2022 respectively. Dividends were paid from cash on hand and borrowings on our line of credit.
Our material cash requirements include the following contractual and other obligations: Dividends Cash dividends in the aggregate amount of $11.8 million, $11.3 million, and $36.3 million were declared in 2025, 2024, and 2023, respectively. Dividends were paid from cash on hand and borrowings on our line of credit.
We believe access to and analysis of our extensive consumer-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships and build loyalty.
We believe access to, analysis of, and acting on our extensive individual-driven information is increasingly valuable as healthcare providers need to better understand and engage the people they serve to create long-term relationships, build loyalty, and improve processes.
See the Consolidated Statements of Cash Flows included in this report for the detail of our operating cash flows. 24 Table of Contents We had a working capital deficit of $16.3 million and $11.8 million on December 31, 2024 and December 31, 2023, respectively.
See the Consolidated Statements of Cash Flows included in this report for the detail of our operating cash flows. We had a working capital deficit of $16.4 million and $16.3 million on December 31, 2025, and December 31, 2024, respectively.
Cash used in investing activities primarily consisted of payments for the acquisition of Nobl Health and purchases of property and equipment including computer software and hardware, building improvements, and furniture and equipment. Cash used in financing activities consisted of payments for borrowings under the Term Loan, Delayed Draw Term Loan, Line of Credit and finance lease obligations.
Cash used in investing activities primarily consisted of payments for the purchases of property and equipment including computer software and hardware, building improvements, and furniture and equipment. Cash used in financing activities consisted of payments for borrowings under the Delayed Draw Term Loan and Revolving Loan.
As of December 31, 2024, our principal sources of liquidity included $4.2 million of cash and cash equivalents, up to $30 million of unused borrowings under our Line of Credit and an additional $24 million on our Delayed Draw Term Loan.
As of December 31, 2025, our principal sources of liquidity included $4.1 million of cash and cash equivalents, up to $30 million of unused borrowings under our Revolving Loan and an additional $27.6 million on our Delayed Draw Term Loan.
Liquidity and Capital Resources Our Board of Directors has established priorities for capital allocation, which prioritize funding of innovation and growth investments, including merger and acquisition activity as well as internal projects. The secondary priority is capital allocation for quarterly dividends and share repurchases.
Our Board of Directors has established priorities for capital allocation, which include funding of innovation and growth investments, including merger and acquisition activity as well as internal projects, and returning capital to shareholders through dividends and share repurchases.
The payment and amount of future dividends, if any, is at the discretion of our Board of Directors and will depend on our future earnings, financial condition, general business conditions, alternative uses of our earnings and cash and other factors. Capital Expenditures We paid cash of $15.4 million for capital expenditures in the year ended December 31, 2024.
The payment and amount of future dividends, if any, is at the discretion of our Board of Directors and will depend on our future earnings, financial condition, general business conditions, alternative uses of our earnings and cash and other factors.
We were also required to maintain a cash flow leverage ratio of 3.00x or less for all testing periods throughout the term(s) of the Credit Facilities. As of December 31, 2024, we were in compliance with our financial covenants.
Pursuant to the Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of 1.10x and a cash flow leverage ratio of 3.50x or less for all testing periods throughout the term of the Credit Facilities. As of December 31, 2025, we were in compliance with our financial covenants.
The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our Common Stock and acquisitions, subject in each case to certain exceptions. The New Credit Agreement also contains certain financial covenants with respect to minimum fixed charge coverage ratio and maximum cash flow leverage ratio.
The negative covenants include, among other things, restrictions regarding the incurrence of indebtedness and liens, repurchases of our common stock, and acquisitions, subject in each case to certain exceptions.
We concluded that it is not more likely than not that an impairment loss had been incurred at December 31, 2024. 22 Table of Contents Key Financial Metrics and Results of Operations The following table sets forth, for the periods indicated, selected financial information derived from our consolidated financial statements and the percentage change in such items versus the prior comparable period, as well as other key financial metrics.
Key Financial Metrics and Results of Operations The following table sets forth, for the periods indicated, selected financial information derived from our consolidated financial statements and the percentage change in such items versus the prior comparable period, as well as other key financial metrics. The discussion that follows the information should be read in conjunction with our consolidated financial statements.
Cash provided by operating activities decreased primarily due to decreased net income net of non-cash items, partially offset by working capital changes.
Cash provided by operating activities decreased primarily due to decreased net income net of non-cash items, partially offset by working capital changes. Working capital changes mainly consisted of changes in deferred contract costs primarily due to the timing of commissions and incentives and related amortization and accrued wages and incentives.
See Note 7, “Income Taxes,” to our Consolidated Financial Statements contained in this report for additional information on the change in the effective tax rates. Recurring Contact Value . Recurring contract value declined in 2024 compared to 2023 primarily due to the lack of growth in new contracts to replace losses.
See Note 6, “Income Taxes,” to our Consolidated Financial Statements contained in this report for additional information on the change in the effective tax rates.
The New Credit Facilities are secured, subject to permitted liens and other agreed upon exceptions, by a first-priority lien on and perfected security interest in substantially all of our present and future assets (including, without limitation, fee-owned real property). The New Credit Agreement contains customary representations, warranties, affirmative and negative covenants (including financial covenants) and events of default.
The Credit Agreement is collateralized by substantially all of our assets, subject to permitted liens and other agreed exceptions, and contains customary representations, warranties, affirmative and negative covenants (including financial covenants), and events of default.
The New Credit Agreement provides for (i) a $30,000,000 revolving credit facility (the “Revolving Loan”) and (ii) a $110,000,000 delayed draw-down term facility (“the “New Delayed Draw Term Loan” and, together with the Revolving Loan, the “New Credit Facilities”).
Debt In February 2025, we entered into a new credit agreement (the “Credit Agreement”), which includes (i) a $30.0 million revolving credit facility (the “Revolving Loan”) and (ii) a $110.0 million delayed draw-down term facility (the “Delayed Draw Term Loan” and, together with the Revolving Loan, the “Credit Facilities”).
Principal amounts outstanding under the Revolving Loan are due and payable in full at maturity at February 6, 2028.
Principal amounts outstanding under the Revolving Loan are due and payable in full at maturity at February 6, 2028. As of December 31, 2025, we had no borrowings outstanding and the availability to borrow $30.0 million on the Revolving Loan.
Interest accrues and is payable monthly on the New Delayed Draw Term Loan and the Revolving Loan at a floating rate equal to the one-month Term SOFR plus a percentage per annum determined by our cash flow leverage ratio, ranging from 2.25% to 2.75%.
We may use the Delayed Draw Term Loan to fund permitted future business acquisitions, repurchases of our common stock, capital expenditures, or payment of dividends and the Revolving Loan to fund ongoing working capital needs and for other general corporate purposes. 25 Table of Contents Interest accrues and is payable monthly at a floating rate equal to the one-month Term SOFR plus a percentage per annum determined by our cash flow leverage ratio, ranging from 2.25% to 2.75% (6.22% at December 31, 2025).
We partner with clients across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model.
We partner with customers across the continuum of healthcare services and believe this cross-continuum positioning is a unique and an increasingly important capability as the evolving healthcare landscape drives its constituents towards a more collaborative and integrated service model. Critical Accounting Estimates The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein.
The following areas are considered critical accounting estimates because they involve significant judgments or assumptions, involve complex or uncertain matters or they are susceptible to change and the impact could be material to our financial condition or operating results: ● Revenue recognition; and ● Valuation of goodwill and identifiable intangible assets.
The following area is considered a critical accounting estimate because it involves significant judgments or assumptions, involves complex or uncertain matters or is susceptible to change, and the impact could be material to our financial condition or operating results: ● Revenue recognition Revenue Recognition We derive a majority of our revenue from renewable subscription-based service agreements with our customers.
Taxes The liability for gross unrecognized tax benefits related to uncertain tax positions was $2.2 million as of December 31, 2024. See Note 7, "Income Taxes", to the Consolidated Financial Statements contained in this report for income tax related information. Purchase Commitments We generally do not make unconditional, non-cancelable purchase commitments.
See Note 6, "Income Taxes," to the Consolidated Financial Statements contained in this report for income tax related information. Purchase Commitments We generally do not make unconditional, non-cancelable purchase commitments. We enter into purchase orders in the normal course of business, but these purchase obligations do not exceed one year.
The effective tax rate increased primarily due to an increase in the effective rate related to state income taxes which fluctuates based on various apportionment factors and rates for the states we operate in, increased provision for uncertain tax positions and decreased tax benefits from the share-based compensation awards.
Provision for income taxes decreased in 2025 compared to 2024 primarily due to decreased taxable income, offset by an increase in the effective tax rate. The effective tax rate increased due to executive compensation exceeding Section 162(m) limits and state income taxes which fluctuate based on various apportionment factors.
The weighted average interest rate on borrowings on the Line of Credit during the years ended December 31, 2024 and 2023 were 7.52% and 7.67%, respectively.
Our weighted average short-term borrowings for the years ended December 31, 2025, and 2024, were $3.1 million and $8.5 million, respectively. The weighted average interest rate on short-term borrowings during the years ended December 31, 2025, and 2024 was 6.63% and 7.52%, respectively.
As of December 31, 2024, we had fixed lease payments of $624,000 and $10,000 for operating and finance leases, respectively payable within 12 months. A summary of our operating and finance lease obligations as of December 31, 2024 can be found in Note 10, "Leases", to the Consolidated Financial Statements contained in this report.
A summary of our operating and finance lease obligations as of December 31, 2025, can be found in Note 9, "Leases", to the Consolidated Financial Statements contained in this report. Taxes The liability for gross unrecognized tax benefits related to uncertain tax positions was $2.4 million as of December 31, 2025.
We had the availability to borrow an additional $24 million on the Delayed Draw Term Loan at December 31, 2024. 25 Table of Contents As of December 31, 2024, principal amounts outstanding under the Line of Credit were due and payable in full, at maturity, in May 2027.
All outstanding principal and interest on the Delayed Draw Term Loan are due and payable in full at the maturity date, February 6, 2030. We had the availability to borrow an additional $27.6 million on the Delayed Draw Term Loan at December 31, 2025, excluding the accordion feature.
We enter into purchase orders in the normal course of business, but these purchase obligations do not exceed one year. Stock Repurchase Program In May 2022, our Board of Directors approved the 2022 Program with a repurchase authorization of 2,500,000 shares of common stock.
Stock Repurchase Program In May 2022, our Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2,500,000 shares of common stock (the “2022 Program”).
Total other expense increased in the 2024 period compared to the 2023 period primarily due to higher interest expense of $1.7 million mainly from borrowings on our Line of Credit and Delayed Draw Term Loan, as well as the increased interest rate on our Term Loan, and lower interest income of $695,000 from decreased money market funds investments.
Total other income (expense). Total other expense increased in the 2025 period compared to the 2024 period primarily due to higher interest expense due to a higher balance on the Delayed Draw Term Loan. Provision for income taxes and effective tax rate .
We expect our depreciation and amortization to increase slightly given continued software and intangible amortization, as well as depreciation on the building renovations when completed in 2025. Operating income and margin . Operating income and margin decreased in 2024 compared to 2023 primarily due to the decline in revenue while direct expenses and depreciation and amortization increased.
Depreciation, amortization and impairment expenses increased in 2025 compared to the 2024 period due to the completion of our headquarters building renovations in June 2025. Operating income and margin . Operating income and margin decreased in 2025 compared to 2024 due to the decline in revenue and the increased compensation expense related to our executive leadership transition.
Removed
On February 26, 2025, our Board of Directors appointed Trent Green as our Chief Executive Officer and to serve as a director, both effective June 1, 2025. Mr. Green brings more than 25 years of healthcare leadership experience, most recently serving as Chief Executive Officer of Amazon One Medical and previously as Chief Operating Officer of Legacy Health.
Added
See Notes 1 and 3 to our consolidated financial statements for a description of our revenue recognition policies. 21 Table of Contents Recent Trends Since the fourth quarter of 2024, Total Recurring Contact Value (“TRCV”) has increased each quarter while revenue per associate and direct selling expenses have improved, giving us confidence about the Company’s financial direction despite certain non-recurring severance and compensation expenses associated with management changes during 2024 and 2025.
Removed
Upon the effectiveness of Mr. Green’s appointment as Chief Executive Officer, Mr. Hays will transition to the role of Chairman. Critical Accounting Estimates The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein.
Added
Our GAAP revenue and operating margin declined since 2023 primarily due to lower new sales and retention rates prior to 2025, which stemmed from sales force changes and less robust product innovation from 2020 through early 2024 as well as the non-recurring costs mentioned above. TRCV, our leading indicator of revenue expectations, declined through the third quarter of 2024.
Removed
Revenue Recognition We derive a majority of our revenue from annually renewable subscription-based service agreements with our customers. Such agreements are generally cancelable on short or no notice without penalty. We also derive revenue from fixed, non-subscription arrangements.
Added
During 2024 and 2025, we made significant changes in our senior management, developed and marketed innovative new products, acquired our rounding tool, and reconstituted a motivated sales force. We also implemented efficiency measures that have allowed us to enhance our customers’ experience while lowering direct expenses and our total number of associates.
Removed
See Notes 1 and 3 to our consolidated financial statements for a description of our revenue recognition policies. 21 Table of Contents Valuation of Goodwill and Identifiable Intangible Assets Intangible assets include customer relationships, trade names, technology, and goodwill.
Added
With TRCV growing and a lower expense run rate, we expect revenue, operating margin, and operating cash flow to grow in 2026.
Removed
Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values and reviewed for impairment with other long-lived assets in the related asset group whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Added
We view TRCV as a leading indicator of revenue expectations. TRCV increased in 2025 compared to 2024 primarily due to sales to new and existing customers, and to improved retention of contracts with existing customers.
Removed
We review intangible assets with indefinite lives for impairment annually as of October 1 and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. This review requires management to assess qualitative factors to determine whether an impairment may have occurred, which inherently involves management’s judgment.
Added
Our TRCV metric represents the amount of revenue projected to be recognized over the next 12 months from renewable contracts and is measured as of the most recent quarter end. TRCV assumes no upsells, downsells, price increases, or cancellations, unless we have been notified by a customer of any such change as of the relevant date.
Removed
This assessment also requires a determination of the fair value of the asset, which often includes several significant estimates and assumptions, including future cash flow estimates, determination of appropriate discount rates, and other assumptions that management believed reasonable under the circumstances.
Added
Since December 31, 2025, the Company’s TRCV has increased from $144.1 million to $152.0 million at March 4, 2026, representing an all-time high for this metric. This growth reflects continued progress in executing the Company’s strategy to grow long-term, subscription-based relationships with large healthcare systems. Revenue. Revenue in 2025 decreased compared to 2024 by $5.7 million.
Removed
Changes in these estimates and assumptions could materially affect the determination of fair value and/or impairment of goodwill or other intangible assets. See Notes 1 and 6 to our consolidated financial statements for a description of our goodwill and intangible asset valuation and impairment policies and associated impacts for the reported periods.
Added
This was mainly from decreased recurring revenue in our existing customer base. Direct expenses . Direct expenses consist primarily of salaries and employee benefits, employee travel and lodging, materials, contract labor, third party software subscription costs, hosted customer conferences, and other direct expenses associated with revenue.
Removed
At December 31, 2024, we assessed our current market capitalization compared to book value, forecasts and margins in our last quantitative impairment testing.
Added
Personnel costs within direct expenses are associated with individuals that facilitate the product delivery, handle customer support calls or inquiries, provide thought leadership and conference support, manage the technology infrastructure for our applications, and develop software and products. Direct expenses represented 38% of revenue in 2025 and 40% of revenue in 2024.
Removed
The discussion that follows the information should be read in conjunction with our consolidated financial statements.
Added
The decrease in expense beyond the decrease due to the reduction in revenue was due to a reduction in labor costs through operations automation and moving to a lower cost model for technology support and development. 22 Table of Contents Selling, general and administrative expenses .
Removed
Revenue in 2024 decreased compared to 2023 by $5.5 million. This was mainly from decreased recurring revenue in our existing client base. Of this decrease, 34% was from our non-core solutions. We view total Recurring Contract Value, or TRCV, a measure of revenue under all renewable contracts for their respective annual renewal periods, as a leading indicator of revenue expectations.
Added
Selling, general, and administrative expenses consist of salaries and employee benefits, commission and amortization of deferred commission, stock-based compensation, employee travel and lodging, third party software subscription and platform costs, marketing costs, facility expenses, office expenses, fees for professional services, provision for credit losses, and other operational expenses.
Removed
TRCV declined for several quarters prior to the fourth quarter of 2024, when it increased slightly. We believe the expansion of our product and services portfolio during 2024, along with a broader sales effort, led to improved sales and retention in the fourth quarter compared with the prior several quarters.
Added
Personnel costs within selling, general, and administrative expenses are associated with our sales team, marketing personnel, and individuals associated with normal corporate functions including accounting, business development, human resources, administrative, internal information systems, and executive management.
Removed
Variable expenses increased $23,000 in the 2024 period compared to the 2023 period primarily from higher conference expenses partially offset by decreased hourly labor and data collection expenses. Variable expenses as a percentage of revenue were 16% and 15% in the 2024 and 2023 periods, respectively.
Added
Selling, general, and administrative expenses increased $9.9 million primarily due to $6.6 million in bonuses related to our executive leadership transition, and $3.0 million in stock compensation related to new executive leadership compensation arrangements. Marketing expenses decreased by $2.4 million, which was offset by an increase in professional fees, technology expense, and bad debt expense. Depreciation and amortization .
Removed
Fixed expenses increased $895,000 primarily due to higher contracted services to support investments in our Human Understanding solutions partially offset by decreased salary and benefit costs from workforce changes and automation and state tax incentive adjustments.
Added
Non-GAAP Financial Measures In addition to consolidated GAAP financial measures, NRC Health reviews various non-GAAP financial measures that management believes to be important in the evaluation of its operating results and performance, including “Adjusted Net Income,” “Adjusted Earnings per Share,” “Adjusted EBITDA”, and “Adjusted EBITDA Margin.” NRC Health believes Adjusted Net Income, Adjusted Earnings per Share, Adjusted EBITDA, and Adjusted EBITDA Margin are helpful supplemental measures to assist management and investors in evaluating the Company’s operating results as (i) they exclude certain items that are unusual in nature or whose fluctuation from period to period do not necessarily correspond to changes in the operations of NRC Health’s business, and (ii) the exclusion of non-cash stock compensation is useful for investors applying certain valuation metrics and is consistent with the leverage ratio for our Credit Agreement.
Removed
During the fourth quarter of 2024, we reduced our workforce to align with lower revenue, which is expected to lower these fixed expenses in future periods. We expect to continue to invest in providing innovative solutions to our clients, which could cause direct expenses to fluctuate as a percentage of revenue. Selling, general and administrative expenses .
Added
We view Adjusted Net Income, Adjusted Earnings per Share, Adjusted EBITDA, and Adjusted EBITDA Margin as operating performance measures.
Removed
Selling, general and administrative expenses decreased in the 2024 period compared to the 2023 period primarily due to decreases in marketing expenses of $2.0 million, web hosting and other software services of $287,000, consulting fees of $304,000, professional development and training of $200,000, and bad debt expense of $175,000 partially offset by increased salary and benefit costs of $1.2 million from investments in strategic leadership, product development and sales teams and increased recruiting expenses of $255,000.
Added
As such, we believe the most directly comparable GAAP financial measures to Adjusted Net Income and Adjusted Earnings per Share are GAAP Net Income and GAAP Earnings per Share, respectively, and the most directly comparable GAAP financial measure to Adjusted EBITDA and Adjusted EBITDA Margin is GAAP Net Income and GAAP Net Income Margin.
Removed
While we continue to invest in product development and sales, our goal is to drive efficiencies and savings in overall costs to offset such investments.
Added
Non-GAAP measures are supplemental financial measures of our performance and should not be considered substitutes for net income, earnings per share, or any other measure derived in accordance with GAAP. This information should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
Removed
We expect a substantial portion of the benefits of our lower expense run rate for the fourth quarter of 2024 to continue into 2025, partially offset by increased compensation expense of our new CEO, including an expected charge during the second quarter of 2025, of approximately $4.9 million (based on the price of our common stock at February 28, 2025) for Mr.
Added
There are limitations to these non-GAAP financial measures because they are not prepared in accordance with GAAP and may not be comparable to similarly titled measures of other companies due to potential differences in methods of calculation and items or events being adjusted.
Removed
Green's signing bonus and quarterly non-cash charges of approximately $608,000 (based on the price of our common stock on February 28, 2025) for Mr. Green's equity grant beginning in June 2025 and continuing through the third anniversary of the grant. In light of Mr.
Added
In addition, other companies may use different measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
Removed
Green's hiring and compensation, we expect to terminate the existing long-term incentive program for our executive leadership team with the consent of the impacted participants and adopt a new incentive program during the second quarter of 2025, which could result in additional expenses. 23 Table of Contents Depreciation, amortization and impairment .
Added
A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. 23 Table of Contents Adjusted Net Income and Adjusted Earnings per Share We define Adjusted Net Income as net income adjusted to add back certain non-recurring executive compensation and non-cash stock compensation and the related tax.
Removed
Depreciation, amortization and impairment expenses increased in 2024 compared to the 2023 period due to increased software investment amortization and intangible amortization from the Nobl acquisition partially offset by less building, furniture and computer equipment depreciation.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are exposed to interest rate risk with our variable rate Term Loan, Delayed Draw Term Note and Line of Credit and our contingent consideration liability. Borrowings under our Term Loan, Delayed Draw Term Loan and Line of Credit, if any, bear interest at a floating rate equal to the 30-day SOFR plus 235 basis points.
Biggest changeWe are exposed to interest rate risk with our variable rate Delayed Draw Term Loan and Revolving Loan. Borrowings under our Delayed Draw Term Loan and Revolving Loan, if any, bear interest at a floating rate equal to the one-month SOFR plus a percentage per annum determined by our cash flow leverage ratio, ranging from 2.25% to 2.75%.
The change in interest expense resulting from a hypothetical change of 100 basis points of the benchmark index rate applied to the maximum borrowings available under the Line of Credit and the balance outstanding under the Term Loan and Delayed Draw Term Loan at December 31, 2024 would increase or decrease future earnings and cash flows by approximately $592,000 annually.
The change in interest expense resulting from a hypothetical change of 100 basis points of the benchmark index rate applied to the maximum borrowings available under the Revolving Loan and the balance outstanding under the Delayed Draw Term Loan at December 31, 2025, would increase or decrease future earnings and cash flows by approximately $0.8 million annually.
Interest rate changes for borrowings under our Term Loan, Delayed Draw Term Note and Line of Credit do not affect the fair value of the related debt but affect future earnings and cash flows. Borrowings under the Delayed Draw Term Note, and Line of Credit may not exceed $75 million and $30.0 million, respectively.
Interest rate changes for borrowings under our Delayed Draw Term Loan and Revolving Loan do not affect the fair value of the related debt but affect future earnings and cash flows. Borrowings under the Delayed Draw Term Loan and Revolving Loan may not exceed $110 million, excluding the accordion feature, and $30.0 million, respectively.
We had $48.5 million of borrowings outstanding under the Delayed Draw Term Note and no borrowings outstanding on our Line of Credit at December 31, 2024. The outstanding balance on the Term Loan was $14.3 million at December 31, 2024.
We had $79.4 million of borrowings outstanding under the Delayed Draw Term Note and no borrowings outstanding on our Revolving Loan at December 31, 2025.
Removed
Our contingent consideration liability associated with our Nobl acquisition is adjusted to fair value at each reporting date, using a discounted cash flow model. Interest rate changes would impact the fair value of our contingent consideration liability but do not impact cash flow or total future expense.
Removed
At December 31, 2024, the carrying amount of our contingent consideration liability was $859,000. Based on a sensitivity analysis, a hypothetical one percent per annum change in market interest rates as of December 31, 2024, would impact the estimated fair value and carrying amount of our contingent consideration liability at December 31, 2024 by approximately $5,000.

Other NRC 10-K year-over-year comparisons