RCM (RCMT) ((RCMT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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RCM Technologies’ recent earnings call painted a picture of robust growth tempered by a few challenges. The company reported strong performances in its Healthcare and Energy Services segments, with a record engineering backlog suggesting promising future prospects. However, issues such as excess medical costs and cash flow challenges slightly dampened the overall positive sentiment.
Record 2026 Engineering Backlog
RCM Technologies announced a record engineering backlog for 2026, as of the end of October. This milestone underscores the company’s strong future business prospects, particularly in the Energy Services segment, which has been a significant contributor to this achievement.
Healthcare Growth
The Healthcare segment demonstrated impressive growth, with school revenue increasing by 20.7% in Q3 2025 compared to the same period in 2024. This growth was fueled by an expanding roster of new school partners and increased commitments from existing clients, highlighting the segment’s robust performance.
Engineering Segment Performance
The Energy Services segment not only secured a record backlog for 2026 but also saw a remarkable revenue increase from Aerospace and Defense, which grew by nearly 45% compared to Q3 2024. This growth translated into a gross profit increase of approximately 49%, showcasing the segment’s strong performance.
Strong Operational Performance
RCM’s consolidated gross profit for Q3 2025 was $19.4 million, marking an 8.8% increase over Q3 2024. This strong operational performance reflects the company’s ability to capitalize on growth opportunities across various segments.
Aerospace and Defense Achievements
RCM’s Aerospace and Defense division received recognition as Bell Flight’s Best New Supplier in 2025. This accolade was attributed to the success of the sales and recruitment teams in building trusted relationships, further enhancing the company’s reputation in the industry.
Excess Medical Costs
Despite the positive developments, RCM faced excess medical costs amounting to approximately $1.8 million year-to-date, with a significant impact in Q3 2025. This challenge has been a notable concern for the company.
Cash Flow Challenges
RCM experienced cash flow challenges due to administrative collection issues with two large school clients, affecting cash flow from operations in Q3 2025. This issue highlights the importance of effective client management and operational efficiency.
IT, Life Sciences, and Data Solutions Decline
The IT, Life Sciences, and Data Solutions group saw a decrease in gross profit by 4.2% in Q3 2025 compared to Q3 2024. This decline indicates areas where the company may need to focus on improvement strategies.
Healthcare Non-School Revenue Decline
Non-school revenue in the Healthcare segment declined by 11.3% in Q3 2025 compared to the previous year. This decline suggests potential challenges in diversifying revenue streams within the segment.
Forward-Looking Guidance
RCM Technologies remains optimistic about its future, focusing on strategic growth and leveraging AI-driven solutions to enhance market differentiation. The company reported a consolidated gross profit of $19.4 million for Q3 2025, an 8.8% increase over the previous year. Despite a slight decrease in adjusted EBITDA, the healthcare segment showed notable growth, and engineering services achieved their best gross profit quarter in history. The company is poised to tackle challenges and capitalize on opportunities in the coming years.
In summary, RCM Technologies’ earnings call highlighted a strong growth trajectory, particularly in the Healthcare and Energy Services segments. While challenges such as excess medical costs and cash flow issues were noted, the company’s record engineering backlog and strategic focus on growth provide a positive outlook. Investors and stakeholders can look forward to RCM’s continued efforts to enhance its market position and drive future success.