National Research Corporation (NRC): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at a specialized healthcare analytics player, and honestly, the landscape for NRC Health as of late 2025 is a real mixed bag. With a Total Recurring Contract Value of $141.7 million backing them up, their customer base is sticky, but that stickiness is being tested defintely. We see moderate supplier power from scarce data scientists and intense rivalry from players like Phreesia, all while they pour $9.6 million into R&D to keep their proprietary Huey AI engine ahead. Before you decide where this business stands strategically, you need to see how these five forces-from customer switching costs to the threat of internal build-outs by health systems-are shaping their near-term opportunities and risks.

National Research Corporation (NRC) - Porter's Five Forces: Bargaining power of suppliers

Technology platform suppliers hold moderate power due to high switching costs for core software.

Specialized human capital (data scientists, healthcare analysts) is scarce, increasing wage pressure.

• Cash flow from operations (TTM leading up to end of 2025): $25.65 million
• Cash flow from operations (Q3 2025): $13.8 million
• Cash flow from operations as percentage of Q3 2025 Revenue: 40%

National Research Corporation (NRC) Health's proprietary Huey AI engine reduces reliance on third-party generic AI vendors.

• Healthcare AI spending in the sector (2025): $1.4 billion
• Health systems domain-specific AI solution deployment (2025): 27%
• GAAP Net Income (Q3 2025): $4.1 million
• Adjusted EBITDA (Q3 2025): $10.9 million

Data collection partners face low power due to the commoditized nature of survey distribution.

Finance: draft 13-week cash view by Friday

National Research Corporation (NRC) - Porter's Five Forces: Bargaining power of customers

You're analyzing National Research Corporation (NRC) and the power its customers hold, which is a critical lens for understanding revenue stability. Large health systems, the core buyers here, are definitely sophisticated. They aren't just buying a survey tool; they are demanding deep integration across their enterprise and require measurable Return on Investment (ROI) to justify the spend. They look for platforms that connect Patient Experience (PX), Consumer Experience (CX), and Employee Experience (EX) data, which is exactly what National Research Corporation (NRC) aims to provide with its comprehensive experience management stack. This complexity in integration naturally raises the hurdle for any potential change.

Customer retention is key for National Research Corporation (NRC), but the reality in 2025 showed some pressure. While the CEO noted a meaningful improvement in customer retention, evidenced by TRCV losses and down sells being reduced by nearly 50%, there was still a noted slowdown in recurring revenue from existing clients during the period. This suggests that while they are losing fewer customers or getting smaller cuts, the remaining base might be spending less overall in certain areas.

Here's a quick look at the retention/loss dynamics reported for the third quarter of 2025:

• TRCV losses and down sells reduced by nearly 50% compared to prior periods.
• Net retention rate reached its highest level since 2020.
• Recurring revenue from existing clients dropped by $1.6 million in Q3 2025 versus Q3 2024.
• Over the first nine months of 2025, recurring revenue from existing clients dropped by $5.0 million.

Still, once a health system is deeply integrated with the National Research Corporation (NRC) Health platform-using its data to drive clinical workflows, align leadership incentives, and manage public reporting like HCAHPS-the switching costs become substantial. The platform is designed to be the central nervous system for experience management, making a migration disruptive to operations, defintely not a simple plug-and-play swap.

The subscription model, which underpins the Total Recurring Contract Value (TRCV), is what locks in that long-term revenue base, making customers sticky. As of the third quarter of 2025, this TRCV stood at $141.7 million, representing an 8% year-over-year increase. This growing base shows that, despite the quarterly revenue pressures from existing clients, the overall commitment to the platform is increasing through new sales and cross-sells.

Consider these key metrics from the third quarter of 2025 that speak to the customer base's commitment:

Finance: draft 13-week cash view by Friday.

National Research Corporation (NRC) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for National Research Corporation (NRC) right now, late in 2025. The rivalry here is definitely not about price wars; it's about proving value in a complex healthcare ecosystem.

The market for healthcare experience management is fragmented. National Research Corporation (NRC) faces rivals like Phreesia and Five9, plus a host of smaller, specialized firms that nibble at specific service areas. This fragmentation means National Research Corporation (NRC) can't rely on sheer scale alone to win.

Competition is intense, focusing squarely on customer loyalty and the ability to demonstrate clear clinical and financial outcomes. For you, this means looking past marketing claims to the hard numbers that show stickiness. National Research Corporation (NRC)'s Total Recurring Contract Value (TRCV) hit $141.7 million as of Q3 2025, which is an 8% year-over-year rise, showing their subscription model is holding up well against rivals. Still, the pressure is on to keep that retention high.

With a Trailing Twelve Months (TTM) revenue of $139.10 million ending Q3 2025, National Research Corporation (NRC) sits as a mid-sized player in the broader business services space, certainly smaller than some of the pure-play tech giants they compete with for mindshare.

The company's core defense in this rivalry rests on two pillars: its Human Understanding expertise and its consistent, high-level industry validation. They compete by being the recognized leader in their niche.

Here's a quick look at National Research Corporation (NRC)'s recent performance metrics that fuel this competitive stance:

• 2025 Best in KLAS Award for Healthcare Experience Management.
• TRCV growth of 8% year-over-year (Q3 2025).
• Adjusted EBITDA margin expanded to 31.4% (Q3 2025).
• Quarterly dividend raised 33% to $0.16 per share (announced late 2025).
• GAAP diluted EPS of $0.18 (Q3 2025).

To put the scale and operational efficiency in context, look at this comparison of key financial indicators from the most recent reported quarter:

The focus on Human Understanding is what National Research Corporation (NRC) uses to differentiate against competitors who might offer broader, but less specialized, data tools. This differentiation is validated by the market itself; they earned the #1 Best in KLAS ranking for Healthcare Experience Management in 2025, which is independent proof of their perceived value over others in the space. Finance: draft 13-week cash view by Friday.

National Research Corporation (NRC) - Porter's Five Forces: Threat of substitutes

You're looking at the substitutes for National Research Corporation (NRC) Health's core business-helping healthcare systems measure and improve the patient experience. The threat here isn't just from direct competitors; it's from health systems choosing to build capabilities in-house or use less specialized alternatives. That's a real concern, especially when the market is pushing for efficiency.

Health systems can develop robust internal data analytics and patient experience departments. Honestly, the general trend shows this is happening. The global data analytics market reached $64.75 billion in 2025, and 80% of companies have integrated big data analytics into their operations. In healthcare specifically, 39% of executives using data analytics reported significant cost savings by spotting inefficiencies. This internal build-up means less reliance on external vendors for basic reporting and trend analysis. The AI in healthcare market, which feeds these internal departments, is projected to hit $24.18 billion in 2025, showing where the internal investment dollars are flowing.

Generalist consulting firms offer project-based experience measurement as an alternative. These firms, which include giants like Deloitte Touche Tohmatsu Limited and McKinsey & Company, compete for the same strategic dollars. The US Healthcare Consultants industry revenue is estimated to reach $18.4 billion in 2025. Globally, the Healthcare Consulting Services Market is valued at $36.44 billion in 2025. While NRC Health posted total revenue of $34.6 million in Q3 2025, these large consulting houses can bundle patient experience measurement into broader, multi-million dollar transformation projects, effectively substituting a dedicated vendor relationship with a project-based engagement.

Regulatory-mandated surveys (HCAHPS) are a necessary, low-cost substitute for some basic data. The Centers for Medicare & Medicaid Services (CMS) launched HCAHPS 2.0 on January 1, 2025, which is the biggest update since its inception. This forces hospitals to focus on new dimensions like care coordination and the restfulness of the environment. For basic compliance, a hospital can use the mandated data, which now allows for cost-effective mixed-mode surveys like Web-Mail or Web-Phone. Early national data from Q1 2025 using phone methodology showed a 32% response rate for HCAHPS 2.0. If a health system only needs to meet the minimum reporting requirement, the internal cost of managing the mandated survey-especially with new digital options-can substitute for purchasing a premium, comprehensive experience platform from NRC Health.

New disruptive models (e.g., Amazon, CVS) are changing care delivery, indirectly substituting traditional patient experience services. While I don't have specific 2025 revenue figures showing Amazon or CVS directly replacing NRC Health's core offering, their expansion into primary and urgent care delivery puts pressure on the entire ecosystem. When care delivery shifts outside traditional hospital walls, the relevance and scope of traditional hospital-centric patient experience measurement-like HCAHPS-narrows. This forces NRC Health to adapt its offerings to these new care settings, or risk having the substitute care model address experience directly.

Here's a quick look at the market context for these substitutes:

The pressure points from these substitutes are clear:

• Internal analytics adoption is high, with 80% of companies integrating big data.
• HCAHPS 2.0 updates emphasize coordination, a key NRC Health focus area.
• Consulting market size is significantly larger than NRC Health's revenue base.
• New HCAHPS modes may lower the perceived cost of basic compliance.

Finance: draft a sensitivity analysis on the impact of a 10% shift of new analytics spend toward in-house builds by Friday.

National Research Corporation (NRC) - Porter's Five Forces: Threat of new entrants

You're looking at National Research Corporation (NRC) and wondering how tough it is for a new company to break into their market. Honestly, the barriers to entry here are substantial, built on a foundation of massive upfront investment, regulatory complexity, and deeply embedded customer trust.

The sheer financial commitment required acts as a major gatekeeper. Developing the kind of specialized, secure software that health systems rely on isn't cheap. For instance, National Research Corporation reported $9.6 million in software development expenditure for the first nine months of 2025. This level of sustained, high-cost investment in proprietary technology immediately screens out smaller, less-capitalized players before they can even reach a viable product stage.

New entrants must also contend with a dense web of compliance requirements. The US healthcare industry is rigorously monitored, meaning any new platform handling Protected Health Information (PHI) must immediately master standards like the Health Insurance Portability and Accountability Act (HIPAA), Centers for Medicare and Medicaid Services (CMS) requirements, and Joint Commission on Accreditation of Healthcare Organizations (JCAHO) standards. Furthermore, the introduction of AI tools, like National Research Corporation's Huey AI, brings new, complex regulatory requirements regarding algorithmic bias and transparency that demand specialized legal and technical resources from day one.

The difficulty in replicating National Research Corporation's existing customer base is perhaps the most significant moat. These are not transactional relationships; they are deep, multi-year integrations. As recently as November 2025, National Research Corporation announced a new partnership with BJC Health System, one of the nation's largest nonprofit integrated healthcare delivery organizations, to unify experiences across its hospitals and clinics. New entrants face the challenge of displacing incumbent solutions within these critical operational environments. This stickiness is quantified by National Research Corporation's recent success: Total Recurring Contract Value (TRCV) losses/downsells were reduced by nearly 50% in Q3 2025, showing customers are actively choosing to stay.

Finally, the specialized nature of the technology itself requires expertise that takes years to build. National Research Corporation's proprietary AI engine, Huey, is described as the first AI engine for healthcare experience management, trained exclusively on personalized data. This deep domain expertise, combined with a commitment to ethical development-evidenced by progress toward HITRUST AI certification-is not easily copied. A competitor needs not just general AI talent, but experts who understand the nuances of patient feedback, clinical workflows, and healthcare ethics.

Here's a quick look at how National Research Corporation's financial strength contrasts with its primary customer base, illustrating the capital disparity new entrants face:

The barriers to entry are high, but the potential rewards for a successful entrant are clear, given the market's reliance on these insights. Still, the path is littered with required capabilities:

• Achieve HIPAA/HITECH compliance immediately.
• Secure access to proprietary, de-identified data sets.
• Demonstrate superior AI model security and ethics.
• Overcome established trust with major health systems.

If you are planning to compete, you need to show a clear path to matching National Research Corporation's $141.7 million TRCV as of Q3 2025, which is the real measure of market penetration.

Finance: draft 13-week cash view by Friday.