Can Paychex’s PEO Strategy Turn Soaring Health Costs Into a Competitive Advantage?

The recently disclosed financial performance of Paychex for the third quarter of fiscal 2025 provides a balanced perspective of both achievements and challenges. Paychex unveiled a revenue growth of 5% for the quarter, which rises to 6% when discounting the impact from the discontinued Employee Retention Tax Credit (ERTC) program. This growth predominantly reflects the robust demand for Paychex’s Human Capital Management (HCM) solutions. Meanwhile, diluted earnings per share increased by 4%, and adjusted diluted earnings per share improved by 8%, demonstrating efficient margin management attributed primarily to automation and technology investments which enhanced operational efficiency by 180 basis points.