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01/10 16:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents strong financial performance with increased revenue, net income, and adjusted EBITDA. The guidance is optimistic, with anticipated growth across segments and strategic acquisitions. The Q&A section reveals positive sentiment from analysts, highlighting strong demand and effective management strategies. Although management avoided specific guidance for 2026, the overall outlook remains positive. Given the company's market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
Company-wide revenues before reimbursable expenses (RBR) $432.4 million in Q3 2025, up 16.8% from $370 million in Q3 2024. Organic RBR grew 10.2% year-over-year, driven by robust market demand and strong execution.
Healthcare segment RBR $219.5 million in Q3 2025, up 19.9% from Q3 2024. Organic growth was 18.6%, driven by broad-based demand across offerings like performance improvement, financial advisory, and revenue cycle managed services.
Education segment RBR $129.4 million in Q3 2025, up 6.9% from Q3 2024. Growth driven by strong demand for strategy and operations, research, and digital offerings.
Commercial segment RBR $83.4 million in Q3 2025, up 26.6% from Q3 2024. Growth driven by acquisitions of AXIA, Treliant, and Wilson Perumal, and organic growth in the commercial digital business.
Net income $30.4 million in Q3 2025, up from $27.1 million in Q3 2024. Increase attributed to revenue growth and operational efficiencies.
Adjusted EBITDA $67.4 million in Q3 2025, 15.6% of RBR, up from $54.9 million (14.8% of RBR) in Q3 2024. Growth driven by increased operating income in Healthcare and Education segments.
Adjusted net income $37.4 million in Q3 2025, up from $31.1 million in Q3 2024. Adjusted diluted EPS increased 25% year-over-year to $2.10.
Free cash flow $85.3 million in Q3 2025, driven by strong cash flow from operations and controlled capital expenditures.
AI and automation solutions: Expanded use of AI and automation across offerings to drive value creation and efficiency. Examples include machine learning models in revenue cycle managed services and AI for research administration.
Revenue cycle managed services: Achieved 20% RBR growth in the first three quarters of 2025 compared to the same period in 2024.
Healthcare segment: Record RBR growth of 20% in Q3 2025 compared to Q3 2024, driven by broad-based demand across offerings.
Education segment: Record RBR growth of 7% in Q3 2025 compared to Q3 2024, driven by demand for strategy, operations, research, and digital offerings.
Commercial segment: Record RBR growth of 27% in Q3 2025 compared to Q3 2024, driven by acquisitions and organic growth in digital business.
Margin expansion: Continued margin expansion across segments, with Healthcare segment operating income margin increasing to 30.9% in Q3 2025 from 27.1% in Q3 2024.
Free cash flow: Generated $85.3 million in free cash flow in Q3 2025, with full-year expectations of $165 million to $185 million.
Acquisitions: Acquired Wilson Perumal & Company, Treliant, and AXIA to enhance capabilities and market positioning.
Integrated commercial strategy: Further integrated commercial offerings to enhance go-to-market strategy, including advanced enterprise performance management capabilities.
Healthcare Segment Challenges: Hospitals and health systems are preparing for reduced funding and decreases in insured patient volumes due to shifts in the Medicaid reimbursement model. Workforce shortages and pressures to improve access and evolve care delivery models are creating an unsustainable operating environment for many organizations.
Education Segment Challenges: Colleges and universities are facing declines in research funding, lower enrollment of domestic and international students, and policy uncertainty. Net tuition pricing pressures persist as students and parents seek affordable education and job training alternatives.
Commercial Segment Challenges: Lower demand for strategy and financial advisory offerings was noted during the quarter, although there was an improvement in sales conversion later in the period. The segment also experienced margin declines due to increased salaries, contractor expenses, and a mix shift toward digital offerings.
Regulatory and Financial Pressures: Persistent financial challenges and regulatory disruptions are impacting clients across all segments, necessitating strategic, financial, and operational evaluations.
Macroeconomic and Market Risks: The company operates in a challenging macroeconomic and regulatory environment, which could impact its ability to sustain growth and margin expansion.
Revenue Guidance: The company has updated its annual revenue before reimbursable expenses (RBR) guidance to a range of $1.65 billion to $1.67 billion, reflecting strong year-over-year growth in the fourth quarter.
Adjusted EBITDA Guidance: The company affirmed its adjusted EBITDA guidance range of 14% to 14.5% of RBR.
Adjusted Non-GAAP EPS Guidance: The company increased its adjusted non-GAAP EPS guidance to a range of $7.50 to $7.70.
Healthcare Segment Outlook: The company expects full-year operating income margin for the Healthcare segment to be in the range of 29% to 31%. Continued strong demand is anticipated for performance improvement, financial advisory, and revenue cycle managed services offerings.
Education Segment Outlook: The company expects continued growth driven by strong demand for strategy and operations, research, and digital offerings. Investments in digital transformation, including AI and automation, are expected to drive further growth.
Commercial Segment Outlook: The company expects operating margins in the Commercial segment to be in the range of 16% to 18% for the full year 2025. Growth is anticipated from acquisitions and integration of strategy and digital capabilities.
Free Cash Flow Guidance: The company expects full-year free cash flow to be in the range of $165 million to $185 million.
Share Repurchase Program: In the third quarter, the company used $18.6 million to repurchase approximately 147,000 shares, bringing the total year-to-date share repurchases to $152.5 million and approximately 1,085,000 shares, representing 6.1% of the common stock outstanding as of December 31, 2024. As of September 30, 2025, $112.6 million remained available for share repurchases under the current share repurchase authorization from the Board of Directors.
The earnings call presents strong financial performance with increased revenue, net income, and adjusted EBITDA. The guidance is optimistic, with anticipated growth across segments and strategic acquisitions. The Q&A section reveals positive sentiment from analysts, highlighting strong demand and effective management strategies. Although management avoided specific guidance for 2026, the overall outlook remains positive. Given the company's market cap, a positive stock price movement of 2% to 8% is likely over the next two weeks.
The earnings call highlights strong financial performance across segments, reaffirmed guidance, and record sales conversions, which are positive indicators. The Q&A session reveals improved visibility and confidence in overcoming temporary delays, though some responses lacked specific data. The market cap suggests moderate sensitivity to news. Overall, the combination of strong results, strategic acquisitions, and positive guidance adjustments suggests a positive stock price movement, likely in the range of 2% to 8% over the next two weeks.
The earnings call revealed strong financial performance with record revenue growth and improved margins. Despite some concerns in the Q&A about strategy consulting and macroeconomic impacts, the overall sentiment remains positive due to strong guidance, a decrease in leverage ratio, and increased demand across segments. The market cap suggests a moderate reaction, leading to a prediction of a 2% to 8% stock price increase.
The earnings report shows strong financial performance with record revenue and net income growth, improved margins, and significant share repurchases. The Q&A session addresses potential risks like regulatory impacts and higher medical costs, but management remains optimistic about growth, particularly in digital and healthcare sectors. Despite some uncertainties, the positive guidance and strategic focus on expansion suggest a positive outlook. Given the company's small market cap, the stock is likely to react positively, with a potential increase of 2% to 8% over the next two weeks.
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