Healthcare Services (HCSG)
NASDAQ:HCSG
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Healthcare Services
(NASDAQ:HCSG)
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Rating:73Outperform
Price Target:
$21.00
▲(6.65% Upside)
Action:ReiteratedDate:02/14/26
Score is driven by an improving financial profile (profitability and cash-flow rebound) and a strong balance sheet, reinforced by constructive 2026 guidance and shareholder-return actions from the earnings call. Technicals add support via a clear uptrend. Valuation tempers the score due to a relatively high P/E and no stated dividend yield.
Positive Factors
Balance sheet strength
Substantial liquidity and very low leverage provide durable financial flexibility. With ~$204M in cash/securities and an undrawn $300M revolver management can fund working capital swings, opportunistic M&A, and sustained buybacks without depending on volatile cash flow, reducing financial risk over cycles.
Negative Factors
Thin, compressed margins
Operating margins are lower than prior peak years and segment profitability remains uneven, limiting operating leverage. Persistent wage and supply cost pressure in labor-intensive services can cap margin improvement, constraining free cash flow upside unless efficiency or pricing gains are sustained.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance sheet strength
Substantial liquidity and very low leverage provide durable financial flexibility. With ~$204M in cash/securities and an undrawn $300M revolver management can fund working capital swings, opportunistic M&A, and sustained buybacks without depending on volatile cash flow, reducing financial risk over cycles.
Read all positive factors
Healthcare Services (HCSG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.34B
Dividend YieldN/A
Average Volume (3M)872.10K
Price to Earnings (P/E)23.4
Beta (1Y)1.15
Revenue Growth6.26%
EPS Growth-19.33%
CountryUS
Employees35,300
SectorHealthcare
Sector Strength45
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)0.44
Shares Outstanding70,267,586
10 Day Avg. Volume832,317
30 Day Avg. Volume872,103
Financial Highlights & Ratios
PEG Ratio0.45
Price to Book (P/B)2.71
Price to Sales (P/S)0.75
P/FCF Ratio9.95
Enterprise Value/Market Cap0.90
Enterprise Value/Revenue0.66
Enterprise Value/Gross Profit4.97
Enterprise Value/Ebitda14.61
Forecast
1Y Price Target
$24.00Price Target Upside21.89% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)0.97
Revenue Forecast (FY)$1.93B
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, ...
How the Company Makes Money
HCSG makes money by contracting with healthcare facilities to operate specific non-clinical functions on an outsourced basis—primarily environmental services and dining/nutrition services—and recognizing service revenue under those customer agreem...
Healthcare Services Key Performance Indicators (KPIs)
Healthcare Services Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call emphasized multiple meaningful positives: revenue growth (6.6% YoY), segment margin expansion, a major campus revenue milestone (> $100M), strong adjusted cash generation, improved contract terms that enhanced collections and liquidity (cash and securities ~$204M, undrawn $300M revolver), and accelerated shareholder returns (completed buyback early and announced $75M plan). Lowlights were largely manageable or one-time in nature, including an $8.3M ERC-related tax benefit that will not recur, higher expected cash tax rate (~25% in 2026), quarter-to-quarter revenue sensitivity from service-day billing (~$10M Q4-to-Q1 impact), reliance on hiring management talent to scale growth, and some segment margin dispersion. Overall, positives materially outweigh the negatives, positioning the company for steady mid-single-digit growth while acknowledging near-term cadence and tax headwinds.Positive Updates
Revenue Growth and Scale
Reported revenue of $466.7 million, representing a 6.6% year-over-year increase; management expects mid-single-digit revenue growth for full-year 2026 and Q1 2026 revenue in the $460–$465 million range.
Negative Updates
Tax Items and One-time ERC Benefit
Q4 included an $8.3 million ($0.12 per share) benefit tied to the tax treatment of certain ERC receipts; effective tax rate for the year was ~13% (Q4 reported as a 9.4% benefit) but management expects the 2026 effective tax rate to be approximately 25%, indicating a meaningful increase in cash tax going forward.
Read all updates
Q4-2025 Updates
Positive
Negative
Revenue Growth and Scale
Reported revenue of $466.7 million, representing a 6.6% year-over-year increase; management expects mid-single-digit revenue growth for full-year 2026 and Q1 2026 revenue in the $460–$465 million range.
Read all positive updates
Company Guidance
Management guided to mid-single-digit revenue growth for fiscal 2026, with Q1 revenue expected in the $460–$465 million range, a step‑up in Q2 and sequential H2 vs H1 growth (noting a Q4→Q1 service‑day impact: 92 days in Q4 2025 vs 90 in Q1 2026, equating to >$10 million on the Q4 revenue base). Key operating targets are to manage cost of services around 86% and SG&A in a 9.5%–10.5% range (with a longer‑term goal of 8.5%–9.5%), and to carry an effective tax rate of approximately 25%; management reiterated that cash flow from operations should approximate net income excluding payroll‑accrual timing (Q4 cash flow from operations $17.4M, $36.4M adjusted for a $19M payroll accrual decrease; Q4 net income $31.2M and diluted EPS $0.44, which included an $8.3M/$0.12 per‑share ERC benefit). On liquidity and capital allocation they finished 2025 with $203.9M of cash and marketable securities, an undrawn $300M revolver (LCs only), completed a $50M repurchase program early (total repurchases of $61.6M in 2025, including $19.6M in Q4), received board authorization to buy up to 10M shares, and plan to repurchase $75M of common stock over the next 12 months.Healthcare Services Financial Statement Overview
Summary
Income Statement
64
Positive
Balance Sheet
83
Very Positive
Cash Flow
71
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.84B | 1.72B | 1.67B | 1.69B | 1.64B |
| Gross Profit | 239.41M | 228.09M | 214.75M | 193.31M | 230.57M |
| EBITDA | 65.32M | 73.96M | 75.26M | 62.86M | 81.56M |
| Net Income | 59.06M | 39.47M | 38.39M | 34.24M | 48.54M |
Balance Sheet | |||||
| Total Assets | 807.78M | 815.47M | 803.18M | 718.33M | 786.80M |
| Cash, Cash Equivalents and Short-Term Investments | 203.89M | 135.77M | 147.46M | 121.48M | 185.19M |
| Total Debt | 24.68M | 16.43M | 43.63M | 33.10M | 17.80M |
| Total Liabilities | 297.57M | 315.55M | 346.57M | 292.16M | 334.12M |
| Stockholders Equity | 510.21M | 499.93M | 456.62M | 426.17M | 452.68M |
Cash Flow | |||||
| Free Cash Flow | 139.15M | 24.47M | 38.09M | -13.38M | 31.42M |
| Operating Cash Flow | 144.97M | 30.80M | 43.50M | -8.17M | 37.11M |
| Investing Cash Flow | -11.00M | 6.05M | -3.29M | 2.58M | -22.99M |
| Financing Cash Flow | -63.33M | -31.05M | -12.15M | -38.93M | -82.65M |
Healthcare Services Technical Analysis
Positive
19.69
Price Trends
19.96
Negative
19.25
Positive
17.27
Positive
Market Momentum
-0.27
Positive
46.56
Neutral
40.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HCSG, the sentiment is Positive. The current price of 19.69 is below the 20-day moving average (MA) of 20.30, below the 50-day MA of 19.96, and above the 200-day MA of 17.27, indicating a neutral trend. The MACD of -0.27 indicates Positive momentum. The RSI at 46.56 is Neutral, neither overbought nor oversold. The STOCH value of 40.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HCSG.
Healthcare Services Risk Analysis
Healthcare Services disclosed 22 risk factors in its most recent earnings report. Healthcare Services reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Healthcare Services Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $1.34B | 23.43 | 11.83% | ― | 6.26% | -19.33% | |
72 Outperform | $1.06B | 28.23 | 10.87% | ― | 29.89% | 10.33% | |
65 Neutral | $1.25B | 6.91 | 18.28% | ― | 10.86% | 125.05% | |
62 Neutral | $1.13B | 78.68 | 3.12% | 2.25% | 17.50% | 154.28% | |
62 Neutral | $1.22B | 54.15 | 2.93% | ― | 68.17% | -85.42% | |
55 Neutral | $2.20B | -1.17 | -39.42% | ― | 4.58% | -61.50% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
HCSG
Healthcare Services
19.11
8.37
77.93%
ACHC
Acadia Healthcare
23.85
-6.27
-20.82%
USPH
US Physical Therapy
74.42
3.06
4.29%
ASTH
Astrana Health
24.27
-7.09
-22.61%
PNTG
Pennant Group
30.56
5.14
20.22%
ARDT
Ardent Health Partners, Inc.
8.78
-4.38
-33.28%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.