Insperity (NYSE:NSP) reported a fourth-quarter 2025 adjusted loss as management outlined steps taken late in the year to recover profitability and reposition the business for 2026. Executives repeatedly pointed to two major headwinds in 2025: continued uncertainty and employment stagnation among small and mid-sized businesses, and a broad-based increase in healthcare claim costs that pressured benefit plan direct costs and gross profit margins.
Fourth-quarter results and operating actions
For the fourth quarter, Insperity posted adjusted EPS of -$0.60 and adjusted EBITDA of -$13 million. The company said it accelerated sales office consolidation during the quarter, which added $2.8 million of operating expense. Excluding that consolidation charge, adjusted EPS would have been -$0.54 and adjusted EBITDA -$11 million, which management said was near the middle of its forecasted ranges.
Gross profit per worksite employee in the quarter was $183 per month, generally in line with the forecast. The company said healthcare claims development related to prior periods ran out higher than expected but was largely offset by favorable results in other benefits components, along with some favorability in workers’ compensation and payroll tax.
Operating expenses decreased 6% year over year in the quarter. Insperity also highlighted continued investment in its Workday strategic partnership, including $15 million invested in HRScale during Q4 (comprised of $10 million in operating expenses and $5 million in capitalized costs), compared with $19 million in Q4 2024 that was fully expensed.
Capital return and liquidity updates
Insperity said it paid $22 million in dividends during the fourth quarter. For the full year, it paid $90 million in dividends and repurchased 232,000 shares for $19 million. The company ended the quarter with $57 million of adjusted cash.
During Q4, Insperity amended its credit facility, extending maturity to December 15, 2028, increasing borrowing capacity from $650 million to $750 million, and raising the maximum leverage ratio from 3x to 3.75x EBITDA (as defined in the agreement). As of Dec. 31, 2025, the company said it had $380 million of available capacity under the facility.
Margin recovery and the 2026 starting point
CEO Paul Sarvadi said the “highlight” of the fourth quarter was completing the fall sales and retention campaign with “measurable margin recovery,” which he said the company achieved. He added that Insperity entered 2026 with a “step-up in several key drivers of gross profit margin,” which management believes positions the company for a significant profitability recovery.
However, management acknowledged that year-end actions affected the starting point for 2026 WSEs. Sarvadi said the primary reason the company ended 2025 with “several thousand” paid WSEs fewer than expected was net change in employment among clients from hiring and layoffs. He also said that new tools and processes introduced during the fall campaign to support client selection and pricing helped gross profit efforts but contributed to lower-than-expected new booked sales in November and December. In addition, he said attrition was slightly higher than expected due to margin-recovery pricing and a higher number of company-initiated non-renewals, both of which management said support profit recovery.
As a result, Insperity lowered its projected growth view for 2026 by around 3% and said it expects average paid WSE growth for 2026 to be in a range of -1.5% to +1.5% versus 2025.
Management also disclosed an organizational realignment that will impact approximately 4% of non-sales staff. CFO Jim Allison said the effort is expected to be substantially completed in the first quarter and is expected to reduce 2026 operating expenses by $20 million, excluding a $9 million restructuring charge that the company plans to exclude from adjusted metrics.
HRScale rollout and expanded benefit options
Insperity positioned HRScale—its joint solution with Workday—as a major transformation aimed at mid-market companies with 150 to 5,000 employees. Sarvadi said the rollout is “on an excellent track,” with beta clients scheduled to go live next month and expected to run payroll starting April 1. The company said its pipeline of existing clients seeking to upgrade and new prospects looking to adopt HRScale continues to grow, and management said its demo capability and value communication tools are resonating.
Based on early activity levels, Insperity said it expects approximately 6,000 to 8,000 paid worksite employees to be on HRScale by year-end, with a “solid queue” for future deployment. In the Q&A, Sarvadi said the company has prioritized larger current clients initially, in part to reduce attrition risk, and indicated that the 2026 financial impact from HRScale would be limited because clients will be phased in during the year (including beta clients in April, followed by groups in July and October). Management noted that HRScale clients are added for first payroll at the beginning of a quarter, which it said provides visibility into future WSE growth.
Separately, executives discussed expanding the use of client-sponsored benefit plans coordinated through Insperity’s licensed brokers. Sarvadi said the initiative is both strategic and responsive to current market conditions, allowing Insperity to offer the “best product option” for each client and, in some cases, reduce benefit-side risk. Management said these alternatives supported increased sales of HR360 without participation in Insperity’s healthcare plan and could be extended to renewing clients as well as prospects.
Guidance and key assumptions for 2026
Allison said 2025 results were significantly impacted by elevated benefits cost trends across the health insurance industry and macroeconomic effects tied to tariff and other government policies. For full-year 2025, he reported average paid WSEs increased 1% to just over 310,000, while adjusted EBITDA declined 51% to $131 million and adjusted EPS declined 71% to $1.03.
For 2026, management said it does not expect a full return to pre-2025 gross profit per WSE levels, but it expects improvement from key drivers throughout the year. The company cited higher pricing observed in January on new and renewing accounts, improved profitability mix after year-end terminations, and plan changes effective January 2026, including a renegotiated contract with UnitedHealthcare, a pooling level reduction to $500,000 per member per year from $1 million, and plan design changes.
Insperity provided the following outlook:
- Q1 2026 average paid WSEs: 303,000 to 305,000 (down 0.3% to 1% vs. Q1 2025)
- Full-year 2026 average paid WSEs: -1.5% to +1.5%
- Q1 2026 adjusted EBITDA: $81 million to $111 million
- Q1 2026 adjusted EPS: $1.03 to $1.50
- Full-year 2026 adjusted EBITDA: $170 million to $230 million
- Full-year 2026 adjusted EPS: $1.69 to $2.72
Additional items in the outlook included expected 2026 interest income about $7 million lower due to reduced rates and cash balances, and an adjusted EPS effective tax rate projected at 34%. On HRScale spending, Allison said investment costs are expected to remain near Q4 2025 levels in the first two quarters of 2026 during go-live and stabilization, then drop to a “much lower” level consistent with a normal product roadmap, with HRScale-related operating expenses expected to be about $12 million less than 2025.
Executives also reiterated a three-year plan aimed at returning to historical performance metrics, describing 2026 as a year centered on margin recovery, followed by balanced growth and profitability in year two and higher performance metrics in year three.
About Insperity (NYSE:NSP)
Insperity, Inc is a leading provider of human resources and business performance solutions designed to help small and midsize businesses operate more efficiently. Headquartered in Kingwood, Texas, the company offers a comprehensive suite of products and services that span workforce management, payroll administration, employee benefits, risk management, and talent development. By leveraging its proprietary technology platform and team of HR experts, Insperity enables clients to focus on core business objectives while outsourcing complex administrative functions.
The company’s flagship offering is its Professional Employer Organization (PEO) service, which allows clients to outsource critical HR tasks such as payroll processing, workers’ compensation administration, and compliance with employment regulations.
