Question · Q1 2026
Andrew Owen Nicholas asked for more details on the second-half ramp for PEO, specifically regarding attach rate dynamics in Florida, whether they have stabilized, and if there's been improvement in the Florida plan. He also inquired about the competitiveness of the broader PEO market, particularly concerning administrative fees.
Answer
President and CEO John Gibson explained that it's early in the enrollment cycles, but initiatives like new plan lineups, underwriting improvements, and AI partnerships are in place for Florida. He noted that employees are cost-sensitive, and Paychex will not adjust underwriting to take undue risk in the competitive Florida market, while overall PEO health plan enrollment is expanding. CFO Bob Schrader added that the enrollment headwind in Florida is due to tougher comparisons in the first half, which will ease after January enrollment. Mr. Gibson described the PEO competitive environment as consistent, emphasizing Paychex's holistic value proposition, including technology, HR advisory, and benefits, which justifies administrative fees against smaller providers.