Healthcare Services (HCSG) AI Stock Analysis

• Market Cap: $1.07B
• Dividend Yield: N/A
• Average Volume (3M): 662.40K
• Price to Earnings (P/E): 26.2
• Beta (1Y): 0.88
• Revenue Growth: 3.71%
• EPS Growth: 1.32%
• Country: US
• Employees: 35,300
• Sector: Healthcare
• Sector Strength: 40
• Industry: Medical - Care Facilities
• EPS (TTM): 0.23
• Shares Outstanding: 72,918,630
• 10 Day Avg. Volume: 608,919
• 30 Day Avg. Volume: 662,401
• PEG Ratio: -1.22
• Price to Book (P/B): 3.93
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 20.27
• Enterprise Value/Market Cap: 0.84
• Enterprise Value/Revenue: 0.13
• Enterprise Value/Gross Profit: 3.41
• Enterprise Value/Ebitda: 2.94
• 1Y Price Target: $15.00
• Price Target Upside: 2.32% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4

• Rating: 78 Outperform
• Price Target: $17.50 ▲(19.37%Upside)

Healthcare Services Group has a robust financial performance, with strong operational efficiency and cash flow management, contributing significantly to its overall stock score. Technical indicators support a positive momentum, although the stock might be overbought. The valuation suggests some overvaluation, but the positive guidance from the earnings call enhances the overall outlook.

Positive Factors

Earnings

The EPS beat of $0.23 vs our model and Street of $0.17 and $0.19, respectively, was due to better gross margin of 15.2% vs our 13.6% estimate.

Financial Performance

HCSG reported first quarter results that were favorable to expectations on both the top and bottom lines.

Valuation

The current valuation of HCSG shares offers an attractive entry point, as it is below the five-year average.

Negative Factors

Budget Concerns

There is a cautious outlook on the budget resolution in Congress that may lean heavily on Medicaid funding.

Contract Expenses

HCSG reported a 4Q revenue beat and an EPS miss due to higher contract start-up expenses resulting from accelerated new contract starts in the quarter.

Healthcare Services Business Overview & Revenue Model

Company Description

Healthcare Services Group, Inc. provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments of nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. It operates through two segments, Housekeeping and Dietary. The Housekeeping segment engages in the cleaning, disinfecting, and sanitizing of resident rooms and common areas of the client's facility, as well as laundering and processing of the bed linens, uniforms, resident personal clothing, and other assorted linen items utilized at a client's facility. The Dietary segment provides food purchasing, meal preparation, and professional dietitian services, which include the development of menus that meet the dietary needs of residents. This segment also offers on-site management and clinical consulting services to facilities. As of December 31, 2021, the company provided its services to approximately 3,000 facilities. Healthcare Services Group, Inc. was incorporated in 1976 and is based in Bensalem, Pennsylvania.

How the Company Makes Money

Healthcare Services Group, Inc. generates revenue through service contracts with healthcare facilities. The company earns money by providing recurring and essential services such as housekeeping, laundry, and dietary management. HCSG typically enters into long-term agreements with its clients, which provide a steady revenue stream. The company may also benefit from economies of scale and operational efficiencies, allowing them to offer competitive pricing while maintaining profitability. Additionally, strategic partnerships and maintaining high service quality can contribute to client retention and expansion opportunities, further enhancing revenue potential.

Healthcare Services Financial Statement Overview

Summary

Healthcare Services demonstrates a stable financial position with consistent revenue growth, strong operational efficiency, and excellent cash flow management. The company maintains a low leverage balance sheet, positioning itself well within the Medical - Care Facilities industry. However, there is room for enhancing net profitability.

Income Statement

Healthcare Services shows solid profitability with a Gross Profit Margin of 37.0% for TTM, indicating efficient cost management. The Net Profit Margin is modest at 2.38%, suggesting room for improved efficiency. Revenue Growth Rate is positive, showing a 1.41% increase from the previous year, indicating stable growth despite industry challenges. However, the EBIT Margin is strong at 24.9%, reflecting good operational control. Overall, the income statement reflects a stable financial performance with potential for growth in profitability.

Balance Sheet

The company maintains a strong balance sheet with a low Debt-to-Equity Ratio of 0.015, indicating minimal leverage and financial stability. The Return on Equity (ROE) is 8.05%, showcasing effective utilization of equity to generate profits. The Equity Ratio of 62.5% suggests a robust capital structure with significant equity financing. Overall, the balance sheet demonstrates financial health and low risk exposure.

Cash Flow

Healthcare Services exhibits a strong Free Cash Flow Growth Rate of 220.65%, indicating improved cash generation capabilities. The Operating Cash Flow to Net Income Ratio is 2.04, highlighting efficient cash conversion from operations. However, the Free Cash Flow to Net Income Ratio is 1.90, suggesting strong cash retention for investments. While cash flows are robust, maintaining this growth trajectory is crucial for future stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.74B	1.72B	1.67B	1.69B	1.64B	1.76B
Gross Profit	263.76M	228.09M	214.75M	193.84M	226.88M	267.99M
EBITDA	75.29M	73.96M	75.21M	62.94M	77.88M	144.83M
Net Income	41.39M	39.47M	38.39M	34.24M	48.54M	98.68M
Balance Sheet
Total Assets	822.96M	802.77M	790.65M	718.33M	777.53M	785.03M
Cash, Cash Equivalents and Short-Term Investments	114.81M	107.31M	147.46M	121.48M	185.19M	264.34M
Total Debt	7.95M	8.03M	36.23M	33.10M	11.30M	11.36M
Total Liabilities	308.76M	302.85M	334.04M	292.16M	324.85M	304.57M
Stockholders Equity	514.20M	499.93M	456.62M	426.17M	452.68M	480.46M
Cash Flow
Free Cash Flow	78.45M	24.47M	38.09M	-13.38M	31.42M	212.87M
Operating Cash Flow	84.34M	30.80M	43.50M	-8.17M	37.11M	217.21M
Investing Cash Flow	-20.14M	6.05M	-3.29M	2.58M	-22.99M	-36.84M
Financing Cash Flow	-53.80M	-31.05M	-12.15M	-38.93M	-82.65M	-68.37M

Healthcare Services Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 14.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HCSG, the sentiment is Neutral. The current price of 14.66 is below the 20-day moving average (MA) of 14.76, above the 50-day MA of 14.51, and above the 200-day MA of 11.94, indicating a neutral trend. The MACD of 0.19 indicates Positive momentum. The RSI at 51.15 is Neutral, neither overbought nor oversold. The STOCH value of 23.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HCSG.

Healthcare Services Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NHC	78 Outperform	$1.60B	14.97	11.19%	2.47%	19.16%	31.92%
HCSG	78 Outperform	$1.07B	26.19	8.37%	―	3.71%	1.32%
PNTG	68 Neutral	$891.02M	33.71	11.28%	―	30.04%	43.47%
MD	63 Neutral	$1.16B	―	-10.01%	―	-1.13%	-17.77%
AMN	53 Neutral	$845.71M	18.62	-21.08%	―	-18.13%	-215.78%
AVAH	53 Neutral	$838.90M	245.98	42.49%	―	9.05%	―
Sector *	52 Neutral	$7.49B	0.22	-61.87%	2.28%	16.62%	1.08%

Healthcare Services Corporate Events

Healthcare Services Holds Annual Shareholder Meeting

On May 27, 2025, Healthcare Services held its annual shareholder meeting to vote on various management proposals. The shareholders elected nine directors for one-year terms, approved the executive compensation in a non-binding advisory vote, and ratified Grant Thornton LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

The most recent analyst rating on (HCSG) stock is a Buy with a $14.00 price target. To see the full list of analyst forecasts on Healthcare Services stock, see the HCSG Stock Forecast page.