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Investing.com -- Insperity Inc. (NYSE:NSP) shares tumbled 27.9% in after-hours trading Monday after the human resources solutions provider reported a significant third-quarter earnings miss and slashed its full-year outlook due to unexpectedly high healthcare costs.
The company reported a third-quarter adjusted loss of -$0.20 per share, falling well short of analysts’ expectations for a $0.22 profit. Revenue came in at $1.62 billion, slightly below the consensus estimate of $1.63 billion but up 4% YoY. The company’s average paid worksite employees increased 1% to 312,842 compared to the same period last year.
Insperity attributed the disappointing results primarily to "higher-than-expected benefits costs" driven by elevated inpatient, outpatient, and pharmacy trends, along with increased frequency of large claims. Gross profit decreased 15% to $195 million from $229 million in the year-ago quarter.
"We are actively working to position Insperity for sustainable profitability at normal historical levels as we execute on our plan in response to unexpected, elevated healthcare cost trend," said Paul J. Sarvadi, Insperity chairman and chief executive officer.
The company’s outlook further alarmed investors, with fourth-quarter adjusted EPS guidance of -$0.79 to -$0.16, far below the $0.06 consensus. Full-year 2025 EPS guidance was slashed to $0.84-$1.47, compared to analyst expectations of $2.11.
In response to the challenges, Insperity announced a multi-year contract extension with UnitedHealthcare that will provide "significant cost reductions" and reduce the pooling level for large claims to $500,000 beginning January 2026.
"We believe the structure of the agreement improves our financial outlook substantially for 2026 and enhances strategic alignment for growth and profitability in subsequent years," said James D. Allison, executive vice president of finance and CFO.
The company also highlighted the official rollout of HRScale, its joint development offering with Workday, which it believes will "position Insperity uniquely within the marketplace and serve as a catalyst for future growth."
During the first nine months of 2025, Insperity returned $87 million to shareholders through share repurchases and dividends.
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