Business Overview: National Research Corporation (NASDAQ: NRC)

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Executive Summary

National Research Corporation, doing business as NRC Health, is a Delaware corporation headquartered at 1245 Q Street, Lincoln, Nebraska. Founded in 1981, NRC Health has spent more than four decades building what it calls a "Human Understanding®" platform: subscription-based healthcare experience management and market research tools used by hospitals, health systems, and payers to measure and improve how patients, consumers, and employees experience care.

The company earns the large majority of its revenue from renewals of multi-year subscription agreements with healthcare provider clients, giving it a highly recurring revenue base (99% of FY2025 revenue was recurring). It most directly competes with Press Ganey and Qualtrics, both of which it describes as having significantly higher revenue than NRC Health.

NRC Health matters because U.S. healthcare reimbursement and quality-reporting frameworks (such as CMS's CAHPS patient-experience surveys) create a regulatory and operational need for standardized, benchmarked patient and consumer experience measurement — a need NRC Health has served continuously since the 1980s, even as the business has recently faced elevated client attrition and renewed competitive and growth pressure.

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1. Core Business Model & How They Work

NRC Health sells subscription access to a suite of survey, analytics, and benchmarking platforms to healthcare provider organizations. Revenue is driven by Total Recurring Contract Value (TRCV) — the sum of active subscription contracts — rather than one-off project fees, and renewals (not new logo sales alone) have historically made up most revenue.

   [Healthcare provider/      [NRC Health subscription:      [Hospital/health
    payer client signs    -->  survey data collection +  -->  system uses insights
    multi-year subscription    benchmarking vs. national     to improve patient
    agreement]                 database of ~300,000           experience, CAHPS
                                 consumers/year + AI tools      compliance scores,
                                 (Huey AI)]                     employee engagement]
                                                                      |
                                                                      v
                                                        [Client renews subscription at
                                                         contract end -> recurring revenue
                                                         (99% of FY2025 revenue);
                                                         client attrition = key risk]

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2. Business Segments

                    National Research Corporation (NRC Health)
                                        |
   ---------------------------------------------------------------------------
   |            |              |              |              |              |
 Market      Patient        Employee       Consumer      Reputation      Huey AI /
 Experience  Experience     Experience     Experience     Solutions    Governance
   |            |              |              |              |         Institute (TGI)
Market       Cross-        Engagement     Feedback       Star ratings    |
Insights     continuum     tools, dept.-  capture +      publication &  AI companion
survey of    digital       level          Community      online         for healthcare
~300,000     patient       analytics      Insights       reputation     experience +
consumers/yr feedback      |              custom         monitoring     membership/
+ brand/ad   platform,     |              research        |             research
measurement  CAHPS-        |               |               |            services for
             compliant,    |               |               |            not-for-profit
             care          |               |               |            health system
             transition                                                 boards/execs

The 10-K does not disclose revenue by individual product line, so the diagram above reflects product/offering structure rather than audited segment revenue shares; NRC Health reports as a single operating segment in its financial statements, with the above representing its named platform offerings rather than distinct reportable financial segments.

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3. Product Portfolio

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4. Competitive Landscape

NRC Health names Press Ganey and Qualtrics as its primary competitors, both explicitly described in its own 10-K as having significantly higher revenue than NRC Health. The company also competes against healthcare organizations' internal research/quality departments, which can choose to perform patient-experience measurement in-house rather than outsourcing it. NRC Health states plainly that "there are relatively few barriers to entry into our market" and that many competitors have greater financial and marketing resources — an unusually candid admission of competitive vulnerability directly from the filing.

                  Healthcare-specific focus
                           |
              NRC Health *|*
              (Human Understanding,
               healthcare-only database)
                           |
   Smaller/niche   ------------------------- Larger/broader enterprise scale
   research shops            |
                     Press Ganey (healthcare-focused,
                     larger revenue base)
                           |
                     Qualtrics (broad enterprise
                     experience-management platform,
                     much larger, cross-industry)
                  General-purpose enterprise focus

NRC Health's positioning is as the smaller, more healthcare-specialized player in a market where both of its named competitors are larger; its differentiation rests on decades of healthcare-specific benchmarking data and deep CAHPS/regulatory-compliance integration rather than scale.

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5. Strategic Strengths & Risks

Strengths (Moat Sources):

• Proprietary national benchmarking database (Market Insights' ~300,000 consumers surveyed annually, built over decades) gives clients comparative context that a new entrant cannot replicate quickly.
• Deep embedding in regulatory compliance workflows (CAHPS-compliant patient experience surveys tied to CMS reimbursement) makes NRC Health's platform operationally difficult to rip out mid-contract.
• Extremely high recurring revenue mix (99% of FY2025 revenue), reflecting genuine subscription stickiness even amid recent attrition.
• Decades-long client relationships and brand recognition ("Human Understanding®") within hospital C-suites and boards (reinforced by The Governance Institute's board-level relationships).

Risks:

• Explicitly low barriers to entry: the company itself states there are "relatively few barriers to entry" into its market, an unusual and material self-disclosed competitive risk.
• Elevated client attrition: management attributed FY2025's revenue decline (down 4% to $137.4 million) directly to "elevated client attrition in the second half of 2024," which continued to weigh on comparisons into 2025, with Q4 2025 revenue down 5% YoY and the stock falling roughly 27% on the Q4 2025 report.
• Scale disadvantage versus named competitors: both Press Ganey and Qualtrics are described as having significantly higher revenue, and Qualtrics in particular brings broader enterprise cross-industry resources and AI investment capacity.
• Revenue decline trend: revenue has fallen in each of the last several fiscal years (from $151.6M in FY2022 to $137.4M in FY2025), even though Total Recurring Contract Value has recently begun growing again (+8% to $144.1M, per Q4 2025 commentary), creating uncertainty about whether the turnaround is durable.
• AI disruption risk: generalized AI tools could commoditize parts of survey design and analytics that previously required NRC Health's specialized platform, though the company's own Huey AI product is a direct response to this risk.

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6. Financial Overview

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7. Summary Conclusion

NRC Health's moat is built on a genuinely hard-to-replicate asset — a decades-deep, healthcare-specific national benchmarking database — paired with deep integration into CMS-linked regulatory compliance workflows that make its subscription product sticky once embedded in a hospital's quality-reporting processes. That said, the company's own 10-K candidly flags relatively low barriers to entry, and recent results (multi-year revenue decline, elevated client attrition through 2024-2025, and scale disadvantages versus larger competitors Press Ganey and Qualtrics) show that stickiness has not been absolute. The biggest forward risk is whether recent green shoots — Total Recurring Contract Value returning to sequential growth and new sales activity up sharply year-over-year per management's Q4 2025 commentary — translate into an actual revenue inflection, or whether continued attrition and competitive pressure from larger, better-resourced rivals keep NRC Health on its multi-year downward revenue trajectory.