NRC

NRC Health is a subscription-based healthcare-analytics firm in structural decline dressed up by an unproven turnaround story. Revenue has fallen every year since 2021 ($148M→$152M→$149M→$143M→$137M) and net income has cratered from $37.5M to $11.6M — down 53% in FY2025 alone — while operating income fell 36% and operating margin compressed from ~27% in 2023 to 16.4%. The headline P/E of 0.4 rests on a corrupt XBRL EPS of $50.00 (tagged +4,708% YoY); dividing the real $11.6M net income by 22.7M shares gives ~$0.51 of EPS, putting the true multiple near 44x on shrinking earnings — the opposite of cheap. P/S of 3.7x and ~32x free cash flow (OCF $26.4M less capex $10.7M ≈ $15.7M) offer no margin of safety for a business that isn't growing.

The balance sheet is the sharper warning. Stockholders' equity has been drained to just $14.0M (down 55%), retained earnings are negative at -$17.3M, and liabilities/equity sits at 8.64x with long-term debt up 30% to $75M against only $4.14M of cash. The eye-catching 82.9% ROE is an artifact of that near-zero equity base, not operational quality. Management returned $31.2M via buybacks ($20.2M) and dividends ($11.0M) in FY2025 — well above free cash flow — funding shareholder returns with debt while the core shrinks. That is not sustainable if the revenue slide persists.