RCM revenue falls 13% in Q1, Covid-19 school closures affect company’s healthcare segment

RCM Technologies Inc. (NASDAQ: RCMT) reported first-quarter revenue fell 12.7% year over year. The Pennsauken, New Jersey-based staffing provider reported its healthcare segment, which provides healthcare staffing to schools as well as other customers, lost approximately $3.0 million in revenue during the first quarter because of school closures. RCM said it believes its major school clients in New York City, Hawaii and Chicago will open for the 2020/2021 academic year, but it cannot give any assurances.

RCM also noted its engineering and IT segments have not seen a material reduction in current assignments because of Covid-19; however, there has been a slowing of new business inquiries and proposals.

“During the next two quarters, our primary focus will be cost and debt reduction without sacrificing the long-term progress we have made in the business,” Executive Chairman Bradley Vizi said. “While aggressively managing the business to today’s economic reality, the entire RCM team is committed to making sure the company is positioned to grow in a post-Covid world.”

RCM noted that it took a $8.0 million impairment charge over a dispute with a customer that was resolved through binding arbitration. According to RCM’s annual report, the dispute involved the balance of accounts receivable for disputed projects that RCM believed it was owed. The customer was a major utility in the US.

“While we are disappointed with the final verdict in our long-standing arbitration dispute, we are pleased to put this time-consuming distraction behind us.,” CFO Kevin Miller said.

Revenue by segment

Share price and market cap

Shares in RCM were down 10.7% to $1.25 as of noon Eastern time today; the company had a market cap of $18.4 million, according to FT.com.