Earnings release
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NEWS RELEASE Healthcare Services Group Reports Third Quarter Results 2026-10-21 Delivers Strong Results Raises 2027 Growth Expectations Revenue of $479.6 million Net income and diluted EPS of $24.9 million and $0.36 Cash ow from operations of $30.2 million; cash ow from operations, excluding the change in payroll accrual, of $20.7 million Expands footprint in senior living and hospitality markets through the acquisition of NEXDINE Hospitality Raises 2027 revenue growth outlook from mid single-digits to low double-digits BENSALEM, Pa.--(BUSINESS WIRE)-- Healthcare Services Group, Inc. (NASDAQ: HCSG) today reported results for the three months ended September 30, 2026. Ted Wahl, Chief Executive O cer, stated, “Our strong third quarter results re ect the underlying strength of our business fundamentals and disciplined operational execution. The organic growth in ection we planned for, and are now delivering, sets the stage for fourth quarter revenue in the range of $535 to $545 million and low double- digit top-line growth in 2027.” Mr. Wahl continued, “Our acquisition of NEXDINE Hospitality in early October represents a signi cant milestone, deepening our health and hospitality services capabilities and unlocking new growth pathways in senior living and hospitality-driven markets. We are excited to partner with the NEXDINE team in their next phase of growth and innovation.” 1
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Mr. Wahl concluded, “Looking ahead, the strong demand for our services, our expanded operational expertise, and extraordinary team members give us great con dence in our growth trajectory across healthcare, senior living, and campus environments. With the industry at the beginning of a multi-decade demographic tailwind, our uni ed health and hospitality services platform strategically positions us to ful ll our Vision and drive sustained long-term value creation for our shareholders.” Third Quarter Results Revenue was reported at $479.6 million. Segment revenues and margins for Environmental and Dietary Services were reported at $217.2 million and 13.3% and $262.4 million and 8.7%, respectively. Cost of services was reported at $399.2 million or 83.2%. The Company’s goal is to manage cost of services in the 86% range. SG&A was reported at $48.5 million. After adjusting for the $0.6 million decrease in deferred compensation, SG&A was $49.1 million or 10.2%. The Company’s goal is to manage SG&A in the 9.5% to 10.5% range, with the longer-term goal of managing those costs into the 8.5% to 9.5% range. E ective tax rate was reported at 26.2%. The Company expects its full-year e ective tax rate to be approximately 25.0%. Net income and diluted EPS were reported at $24.9 million and $0.36, respectively. Balance Sheet and Liquidity The Company’s primary sources of liquidity remain cash ow from operating activities, cash and cash equivalents, and its revolving credit facility. Cash ow from operations was reported at $30.2 million. After adjusting for the $9.5 million increase in the payroll accrual, cash ow from operations was $20.7 million. As of the end of the third quarter, the Company had cash and marketable securities of $204.3 million and an unutilized $300.0 million credit facility. NEXDINE Hospitality Acquisition On October 6, 2026, the Company completed the acquisition of NEXDINE Hospitality for an upfront purchase price of $93.5 million, funded with cash on hand. NEXDINE will continue to operate as a wholly-owned subsidiary of HCSG, retaining its brand identity and leadership team, and is expected to contribute over $150 million in annual 2
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revenue at comparable margins to the Company’s while being immediately accretive to earnings. Genesis Bankruptcy Update As a result of recent key developments in the Genesis Bankruptcy case, including the court approved sale of Genesis to 101 W. State Street on October 14, 2026, the Company recorded an estimated recovery of $6.1 million. There remains a substantially higher potential upper-range recovery, subject to certain variables and contingencies. The resolution of such variables and contingencies are not known and cannot be reasonably estimated at this time. Share Repurchases Under its February 2026 plan to repurchase $75.0 million of common stock through January 2027, the Company repurchased $11.7 million of common stock during the third quarter. Year to date, the Company has repurchased $56.6 million of common stock and has 7.7 million shares remaining under its authorization. Conference Call and Upcoming Events The Company will host a conference call on Wednesday, October 21, 2026, at 8:30 a.m. Eastern Time to discuss its results for the three months ended September 30, 2026. The call may be accessed via phone at (833) 461-5787, Conference ID: 231251110. The call will be simultaneously webcast under the "Events & Presentations" section of the Investor Relations page on the Company’s website, www.hcsg.com. A replay of the webcast will be available on the website for one year following the date of the earnings call. The Company will be attending and presenting at the UBS Global Healthcare Conference on November 9 in Palm Beach Gardens, FL. The Company will also be attending and presenting at the Stephens Annual Investment Conference on November 18 in Nashville, TN. Additionally, the Company will be attending and presenting at the 9th Annual Evercore Healthcare Conference on December 1 in Coral Gables, FL. About Healthcare Services Group, Inc. Healthcare Services Group, Inc. (NASDAQ: HCSG) is a premier health and hospitality services platform o ering comprehensive solutions across healthcare, senior living, and campus environments. With 50 years of experience, HCSG and its family of brands deliver operational excellence, an enhanced customer experience, and specialized environmental and culinary expertise for its client-partners nationwide. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This release and any schedules incorporated by reference into it may contain forward-looking statements within 3
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the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions. Words such as “believes,” “anticipates,” “plans,” “expects,” “estimates,” “will,” “goal,” “intend” and similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward- looking information is also subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks arising from our providing services primarily to the healthcare industry and primarily providers of long-term care; credit and collection risks associated with the healthcare industry; the impact of bank failures; our claims experience related to workers’ compensation, general liability and other insurance programs; the e ects of changes in, or interpretations of laws and regulations governing the healthcare industry, our workforce and services provided, including state and local regulations pertaining to the taxability of our services and other labor- related matters such as minimum wage increases; the Company's expectations with respect to selling, general, and administrative expense; the impacts of past or future cyber attacks or breaches; global events including ongoing international con icts and increased energy prices; and the risk factors described in Part I of our Form 10-K for the scal year ended December 31, 2025 under “Government Regulation of Customers,” “Service Agreements and Collections,” and “Competition” and under Item 1A. “Risk Factors” in such Form 10-K. These factors, in addition to delays in payments from customers and/or customers undergoing restructurings, have resulted in, and could continue to result in, signi cant additional bad debts in the near future. Additionally, our operating results have been in the past and could in the future be adversely a ected by continued in ation particularly if increases in the costs of labor and labor-related costs, materials, supplies and equipment used in performing services (including the impact of potential tari s) cannot be passed on to our customers. In addition, we believe that to improve our nancial performance we must continue to obtain service agreements with new customers, retain and provide new services to existing customers, achieve modest price increases on current service agreements with existing customers and/or maintain internal cost reduction strategies at our various operational levels. Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies. There can be no assurance that we will be successful in that regard. USE OF NON-GAAP FINANCIAL INFORMATION To supplement HCSG’s consolidated nancial information, which are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), the Company believes that certain non- 4
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GAAP nancial measures are useful in evaluating operating performance and comparing such performance to other companies. The Company presents cash ow from operations (excluding the change in payroll accrual), earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding items impacting comparability (“Adjusted EBITDA”). We cannot provide a reconciliation of forward-looking non-GAAP measures to GAAP due to the inherent di culty in forecasting and quantifying certain amounts that are necessary for such reconciliation. The presentation of non-GAAP nancial measures is not meant to be considered in isolation or as a substitute for nancial statements prepared in accordance with GAAP. HEALTHCARE SERVICES GROUP, INC.CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(in thousands, except per share data)For the Three Months EndedFor the Nine Months EndedSeptember 30,September 30, 2026 2025 2026 2025 Revenue $ 479,604$ 464,338$ 1,413,178$ 1,370,491Operating costs and expenses:Cost of services 399,215 367,9331,182,1611,203,157 Selling, general and administrative48,452 50,541 143,034 144,670 Income from operations 31,937 45,864 87,983 22,664 Other income, net 1,791 11,444 11,289 16,650 Income before income taxes33,728 57,308 99,272 39,314 Income tax provision 8,851 14,355 25,639 11,499 Net income $ 24,877$ 42,953$ 73,633$ 27,815 Net income per common shareBasic $ 0.37$ 0.59$ 1.07$ 0.38Diluted $ 0.36$ 0.59$ 1.05$ 0.38Weighted-average common shares outstandingBasic 68,005 72,237 68,873 73,019Diluted 69,379 72,966 70,110 73,505 HEALTHCARE SERVICES GROUP, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(in thousands)September 30,2026December 31,2025 Cash and cash equivalents $ 134,598$ 125,189Restricted cash equivalents 115 5,577Marketable securities, at fair value 34,223 42,774Restricted marketable securities, at fair value35,367 30,352Accounts receivable, net 309,595 281,303Notes receivable — short-term, net 24,504 31,243 Other current assets 44,359 59,977 Total current assets 582,761 576,415Property and equipment, net 30,777 27,586Notes receivable — long-term, net 42,350 25,209Goodwill 90,456 79,797Other intangible assets, net 16,860 6,964Deferred compensation funding 59,018 55,90928176 22373 5
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Other assets 28,176 22,373 Total assets $ 850,398$ 794,253 Accrued insurance claims — current $ 21,353$ 24,371 Other current liabilities 185,069 146,004 Total current liabilities 206,422 170,375Accrued insurance claims — long-term 41,156 46,142Deferred compensation liability — long-term59,122 56,276Lease liability — long-term 11,433 9,659Other long-term liabilities 814 1,591 Stockholders' equity 531,451 510,210 Total liabilities and stockholders' equity$ 850,398$ 794,253 HEALTHCARE SERVICES GROUP, INC.RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES(Unaudited) Reconciliation of GAAP net income toEBITDA and Adjusted EBITDA For the Three Months EndedFor the Nine Months EndedSeptember 30,September 30, 2026 2025 2026 2025 (in thousands)GAAP net income$ 24,877$ 42,953$ 73,633$ 27,815Income tax provision 8,851 14,355 25,639 11,499Interest, net (2,166) (7,546) (6,179) (11,731) Depreciation & amortization4,056 4,029 11,382 12,908 EBITDA $ 35,618$ 53,791$ 104,475$ 40,491 Share-based compensation2,942 2,602 8,527 8,881 Adjusted EBITDA$ 38,560$ 56,393$ 113,002$ 49,372 Adjusted EBITDA as a percentage of revenue8.0% 12.1% 8.0% 3.6%1. Includes right-of-use asset depreciation of $1.9 million and $5.2 million for the three and nine months ended September 30, 2026, respectively, and$2.1 million and $6.3 million for the three and nine months ended September 30, 2025, respectively. Reconciliation of GAAP cash fromoperations to cash ow from operations(excluding the change in payroll accrual) For the Three Months EndedFor the Nine Months EndedSeptember 30,September 30, 2026 2025 2026 2025 (in thousands)GAAP cash from operations$ 30,170$ 71,293$ 95,770$ 127,581 Change in accrued payroll(9,491) 15,799 (23,786) 134 Cash ow from operations (excluding thechange in payroll accrual)$ 20,679$ 87,092$ 71,984$ 127,715 1. The accrued payroll adjustment re ects changes in accrued payroll for the three and nine months ended September 30, 2026 and 2025. The Companyprocesses payroll on set weekly and bi-weekly schedules, and the timing of payments may result in operating cash ow increases or decreases whichare not indicative of the Company’s quarterly cash ow performance. Company Contacts: Theodore Wahl President and Chief Executive O cer Vikas Singh Executive Vice President and Chief Financial O cer 1 (1) 6
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Matthew J. McKee Chief Communications O cer 215-639-4274 investor-relations@hcsgcorp.com Source: Healthcare Services Group, Inc. 7