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Healthcare Services Agrees to Pay $6M Penalty to SEC
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Healthcare Services Agrees to Pay $6M Penalty to SEC

Healthcare Services Group (HCSG) has agreed to pay a penalty of $6 million to the Securities and Exchange Commission to settle an investigation into the company’s EPS calculations from 2014 to 2017.

The company engages in the provision of keeping, laundry and dietary services to long-term care and related healthcare facilities. (See Healthcare Services stock charts on TipRanks)

Healthcare Services was accused of engaging in accounting and disclosure violations that led to inflated quarterly EPS figures and helped them meet analysts’ estimates for several quarters. The company has neither admitted nor denied the charges.

The CEO of Healthcare Services, Ted Wahl, said, “The Company’s Board of Directors and management team remain committed to maintaining strong internal controls and adhering to best practices for compliance and corporate governance.”

On August 10, Berenberg Bank analyst Sam England reiterated a Hold rating on the stock and lowered the price target to $28 from $29. The new price target implies 8.7% upside potential from current levels.

The analyst noted, “With cost pressures rising on healthcare facilities in the U.S. due to falling reimbursement rates and legislative change, we believe the drivers for outsourcing are strong and should drive medium-term growth in HCSG’s end markets.”

“COVID-19 is putting pressure on the operators of long-term and post-acute care facilities. In the near term, this is restricting HCSG’s ability to grow its business both in terms of new customer additions and expanding existing contracts,” England added.

The stock has a Hold consensus rating based on 5 unanimous Holds. The average Healthcare Services price target of $28.56 implies upside potential of 10.9%.

TipRanks data shows that financial blogger opinions are 100% Bullish on HCSG, compared to the sector average of 69%.

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