Insperity Exceeds Q1 2026 Expectations with Strong Adjusted EPS and EBITDA Results
Insperity, a leading provider of human resources and payroll services, reported strong financial results for the first quarter of 2026, exceeding expectations in key areas. In its quarterly earnings conference call on April 30th, the company revealed Adjusted EPS of $1.31 and Adjusted EBITDA of $103 million, both of which surpassed the midpoint of their expected range.
The quarterly results were driven by outperformance in gross profit and operating expense management, partially offset by slightly lower-than-expected unit growth. The average number of paid worksite employees came in at 303,049, a 1.0% decrease versus Q1 2025. Notably, client attrition totaled 11% in Q1 2026, within the company's historical range of 9%-12%. Net hiring within the client base was in line with their forecast and slightly higher than Q1 2025, but the hiring occurred later in the quarter than expected.
Total gross profit in Q1 2026 decreased by 3% to $302 million, a significant improvement compared to the 21% decline experienced in Q4 2025. Gross profit per Worksite Employee was $332 per month, slightly above their forecast and within their range of expectations. The favorability was primarily driven by lower-than-expected benefit costs, partially offset by the lower Worksit Employee volume.
The company also highlighted a positive impact from their new contract terms with UnitedHealthcare, which is expected to help flatten their quarterly earnings pattern starting this year. This is due to a pooling level change from $1 million per member per year down to $500,000, resulting in a higher fixed premium charged evenly throughout the year and significantly weighted claims reimbursements towards the latter quarters.
Insperity's CEO, Paul Sarvadi, emphasized the company's progress in their margin recovery plan, citing several positive signs contributing to these results. These include slightly favorable runoff of prior period claims, reduced large claim activity, and lower-than-expected pharmacy claims. While remaining cautious about potential outcomes for the remainder of the year, Insperity appears to be on track to achieve its goals.
The company's ability to manage costs and maintain a strong financial performance is a testament to their commitment to delivering value to their clients and shareholders. As they continue to navigate the evolving HR landscape, Insperity's focus on innovation and customer satisfaction will undoubtedly remain crucial in driving future success.
