Healthcare Services (HCSG) AI Stock Analysis

• Market Cap: $1.10B
• Dividend Yield: N/A
• Average Volume (3M): 951.08K
• Price to Earnings (P/E): 111.5
• Beta (1Y): 0.97
• Revenue Growth: 5.17%
• EPS Growth: -65.33%
• Country: US
• Employees: 35,300
• Sector: Healthcare
• Sector Strength: 48
• Industry: Medical - Care Facilities
• EPS (TTM): 0.21
• Shares Outstanding: 72,412,730
• 10 Day Avg. Volume: 821,519
• 30 Day Avg. Volume: 951,084
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.86
• Enterprise Value/Revenue: 0.54
• Enterprise Value/Gross Profit: 4.93
• Enterprise Value/Ebitda: 27.17
• 1Y Price Target: $17.00
• Price Target Upside: 7.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 68 Neutral
• Price Target: $16.50 ▲(4.56% Upside)

The overall stock score of 68 reflects a stable financial position with positive cash flow trends and technical momentum. However, challenges such as high valuation, declining margins, and restructuring impacts weigh on the score. The earnings call provided mixed signals, with strong revenue growth but significant financial setbacks.

Positive Factors

Revenue Growth

Revenue growth is slightly ahead of the management's prior guidance, driven by supportive trends in skilled nursing facilities and positive Medicare/Medicaid rate updates.

Share Repurchase

The company has announced a $50 million 12-month repurchase plan, indicating confidence in its financial health and potential future performance.

Negative Factors

Bankruptcy Impact

The bottom line results were lower than expectations due to a bad-debt expense related to the bankruptcy of its largest customer.

Customer Bankruptcy

Genesis Healthcare Group, one of the largest skilled nursing operators in the United States, announced that it has filed for Chapter 11 bankruptcy.

Healthcare Services Business Overview & Revenue Model

Company Description

Healthcare Services Group, Inc. (HCSG) is a leading provider of housekeeping, dining, and dietary services to the healthcare industry, including nursing homes and other long-term care facilities. Founded in 1977, HCSG operates primarily within the healthcare sector, focusing on delivering high-quality support services that enhance patient care and operational efficiency. The company's core offerings include cleaning services, food service management, and the provision of nutritional programs, all tailored to meet the unique needs of healthcare environments.

How the Company Makes Money

HCSG generates revenue primarily through service contracts with healthcare facilities, which include long-term care facilities, hospitals, and rehabilitation centers. The company charges clients based on a fee-for-service model, where revenue is derived from contracted service agreements that outline specific service expectations and pricing. Key revenue streams include daily service fees for housekeeping and dietary services, as well as additional charges for specialized services or equipment. HCSG also benefits from long-term contracts, which provide stable and predictable income. Significant partnerships with healthcare organizations and an emphasis on compliance with health and safety regulations further enhance HCSG's market position and contribute to its earnings.

Healthcare Services Financial Statement Overview

Summary

Healthcare Services demonstrates a healthy financial position with stable revenue growth, strong operational efficiency, and excellent cash flow management, accompanied by a low leverage balance sheet. The company is well-positioned within the Medical - Care Facilities industry for continued growth, though enhancing net profitability remains a strategic focus.

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	1.77B	1.72B	1.67B	1.69B	1.64B	1.76B
Gross Profit	192.95M	228.09M	214.75M	193.84M	230.57M	267.99M
EBITDA	34.99M	73.96M	75.21M	62.94M	77.88M	144.83M
Net Income	10.81M	39.47M	38.39M	34.24M	48.54M	98.68M
Balance Sheet
Total Assets	802.20M	802.77M	790.65M	718.33M	777.53M	785.03M
Cash, Cash Equivalents and Short-Term Investments	164.08M	107.31M	147.46M	121.48M	185.19M	264.34M
Total Debt	7.05M	8.03M	36.23M	33.10M	17.80M	16.66M
Total Liabilities	325.16M	302.85M	334.04M	292.16M	324.85M	304.57M
Stockholders Equity	477.04M	499.93M	456.62M	426.17M	452.68M	480.46M
Cash Flow
Free Cash Flow	90.88M	24.47M	38.09M	-13.38M	31.42M	212.87M
Operating Cash Flow	96.80M	30.80M	43.50M	-8.17M	37.11M	217.21M
Investing Cash Flow	5.27M	6.05M	-3.29M	2.58M	-22.99M	-36.84M
Financing Cash Flow	-48.47M	-31.05M	-12.15M	-38.93M	-82.65M	-68.37M

Healthcare Services Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 15.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 15.78 is above the 20-day moving average (MA) of 14.38, above the 50-day MA of 14.27, and above the 200-day MA of 12.47, indicating a bullish trend. The MACD of 0.45 indicates Negative momentum. The RSI at 67.97 is Neutral, neither overbought nor oversold. The STOCH value of 78.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HCSG.

Healthcare Services Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MD	77 Outperform	$1.44B	12.64	14.27%	―	-3.08%	―
PNTG	71 Outperform	$855.41M	32.19	11.44%	―	30.58%	24.86%
NHC	69 Neutral	$1.71B	16.44	10.65%	2.15%	25.19%	13.44%
HCSG	68 Neutral	$1.10B	111.48	2.28%	―	5.17%	-65.33%
AVAH	59 Neutral	$1.47B	99.34	42.49%	―	11.53%	―
AMN	56 Neutral	$753.07M	18.62	-40.13%	―	-14.33%	-398.68%
Sector *	50 Neutral	AU$2.44B	6.39	10.94%	2.84%	37.30%	12.91%

Healthcare Services Corporate Events

Healthcare Services Responds to Genesis HealthCare Bankruptcy

Healthcare Services Group, Inc. announced that Genesis HealthCare, Inc. filed for Chapter 11 bankruptcy on July 9, 2025. Despite this, HCSG expects to maintain its services to Genesis facilities without disruption. The bankruptcy will result in non-cash charges for HCSG in the second and third quarters of 2025. CEO Ted Wahl stated that while the Genesis situation is disappointing, the overall industry fundamentals remain strong, and HCSG’s growth and cash flow expectations for 2025 remain unchanged, with anticipated mid-single digit revenue growth and $60 to $75 million in cash flow from operations.

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.