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Healthcare Services
(NASDAQ:HCSG)
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Rating:78Outperform
Price Target:
$29.00
▲(26.58% Upside)
Action:Reiterated
Date:10/24/26
Overall score is driven primarily by improved financial performance (sharp TTM growth, margin expansion, and a low-leverage balance sheet) and a very positive earnings outlook with raised 2027 growth expectations and an accretive acquisition. Offsetting factors are mixed cash flow consistency and technically overextended momentum signals (high RSI/Stoch), while valuation looks reasonable with a mid-teens P/E and no dividend yield data provided.
Positive Factors
Improved growth and margins
The sharp increase in revenue, net income, and margins indicates stronger operating execution and improved earnings capacity. If management sustains recent client wins and cost discipline, the higher profitability base can support reinvestment and strengthen performance over the next several quarters.
Negative Factors
Volatile cash conversion
Although current cash generation is positive and broadly aligned with earnings, the decline in free cash flow and history of uneven conversion reduce confidence in consistency. Variable cash generation can complicate acquisition funding, shareholder returns, and investment planning across future quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Improved growth and margins
The sharp increase in revenue, net income, and margins indicates stronger operating execution and improved earnings capacity. If management sustains recent client wins and cost discipline, the higher profitability base can support reinvestment and strengthen performance over the next several quarters.
Read all positive factors
Healthcare Services Key Performance Indicators (KPIs)
Any
Revenue By Segment
Examines revenue contributions from different business segments, indicating which areas drive growth and where the company might focus future expansion efforts.
Examines revenue contributions from different business segments, indicating which areas drive growth and where the company might focus future expansion efforts.
Data provided by:
The Fly
The FlyHealthcare Services (HCSG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.74B
Dividend Yield6.27%
Average Volume (3M)795.67K
Price to Earnings (P/E)16.8
Beta (1Y)0.99
Revenue Growth3.96%
EPS Growth175.90%
CountryUS
Employees36,000
SectorHealthcare
Sector Strength45
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)1.51
Shares Outstanding68,632,200
10 Day Avg. Volume867,462
30 Day Avg. Volume795,671
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 Cap0.71
Enterprise Value/Revenue0.66
Enterprise Value/Gross Profit4.01
Enterprise Value/Ebitda9.20
Forecast
1Y Price Target
$25.33Price Target Upside10.58% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)1.29
Revenue Forecast (FY)$1.94B
Healthcare Services Business Overview & Revenue Model
Company Description
Healthcare Services Group, Inc., established in 1976 and based in Bensalem, Pennsylvania, provides outsourced management and operational services to healthcare and senior living facilities nationwide. The company supports departments such as house...
How the Company Makes Money
HCSG makes money by contracting with healthcare facilities to manage and staff non-clinical operations—primarily housekeeping/laundry (environmental services) and dining/nutrition (food service). Revenue is generated under service agreements where...
Healthcare Services Earnings Call Summary
Earnings Call Date:Oct 21, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Feb 17, 2027
Earnings Call Sentiment Positive
The call was strongly positive, with robust third-quarter execution, revenue of $479.6 million, improving bad debt performance, a substantial liquidity position, the NEXDINE acquisition, and a raised 2027 growth outlook. Management also highlighted demographic tailwinds, strong client retention, and continued organic momentum. The principal challenges were uncertainty around additional Genesis recoveries, the volatility of bad debt and workers' compensation, M&A-related SG&A and lost interest income, and timing-related cash flow fluctuations.Positive Updates
Ninth Consecutive Sequential Revenue Increase
Third-quarter revenue was $479.6 million, representing the ninth sequential revenue increase over the past 10 quarters. Management attributed the top-line growth to new client wins and high retention rates.
Negative Updates
Uncertainty Around Additional Genesis Recovery
Although HCSG recognized a $6.1 million recovery, any higher recovery remains subject to claim allowances, the ultimate amount of claims filed, and assets available for distribution. Management said the variables are not known, no timing can be specified, and it does not expect a scenario involving 100% recoveries.
Read all updates
Q3-2026 Updates
Positive
Negative
Ninth Consecutive Sequential Revenue Increase
Third-quarter revenue was $479.6 million, representing the ninth sequential revenue increase over the past 10 quarters. Management attributed the top-line growth to new client wins and high retention rates.
Read all positive updates
Company Guidance
Guidance calls for Q4 revenue in the range of $535 million-$545 million, with NEXDINE expected to contribute over $150 million in annual revenue at comparable margins and be immediately accretive to earnings; 2027 revenue growth is being raised from the mid-single digits to low double digits, inclusive of a mid-single-digit growth target organically, while NEXDINE is viewed as a double-digit growth opportunity. Cost of services is expected to be managed in the 86% range, SG&A in the 9.5%-10.5% range with the longer-term goal of 8.5%-9.5%, and the 2026 effective tax rate is expected to be approximately 25%. For cash flow, Q4 is expected to have an $18 million negative impact from a six-day decrease in accrual days from 11 days in Q3 to five days in Q4; 2027 Q1 is expected to have a $19 million positive effect from a six-day increase to 11 days, Q2 about a -$9 million effect from a two-day decrease to nine days, Q3 about a $13 million positive effect from a two-day increase to 11 days, and Q4 of 2027 an $18 million or so negative effect from a five-day decrease to six days.Healthcare Services Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
86
Very Positive
Cash Flow
67
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.88B | 1.84B | 1.72B | 1.67B | 1.69B | 1.64B |
| Gross Profit | 307.15M | 239.41M | 228.09M | 214.75M | 193.31M | 230.57M |
| EBITDA | 133.95M | 86.22M | 73.96M | 75.26M | 62.86M | 81.56M |
| Net Income | 104.88M | 59.06M | 39.47M | 38.39M | 34.24M | 48.54M |
Balance Sheet | ||||||
| Total Assets | 850.40M | 807.78M | 815.47M | 803.18M | 718.33M | 786.80M |
| Cash, Cash Equivalents and Short-Term Investments | 204.19M | 203.89M | 135.77M | 147.46M | 121.48M | 185.19M |
| Total Debt | 11.43M | 24.68M | 16.43M | 43.63M | 33.10M | 17.80M |
| Total Liabilities | 318.95M | 297.57M | 315.55M | 346.57M | 292.16M | 334.12M |
| Stockholders Equity | 531.45M | 510.21M | 499.93M | 456.62M | 426.17M | 452.68M |
Cash Flow | ||||||
| Free Cash Flow | 109.61M | 139.15M | 24.47M | 38.09M | -13.38M | 31.42M |
| Operating Cash Flow | 116.08M | 144.97M | 30.80M | 43.50M | -8.17M | 37.11M |
| Investing Cash Flow | -23.96M | -11.00M | 6.05M | -3.29M | 2.58M | -22.99M |
| Financing Cash Flow | -78.90M | -63.33M | -31.05M | -12.15M | -38.93M | -82.65M |
Healthcare Services Technical Analysis
Positive
22.91
Price Trends
21.74
Positive
22.38
Positive
21.27
Positive
Market Momentum
0.50
Negative
81.67
Negative
91.28
Negative
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 22.91 is above the 20-day moving average (MA) of 21.37, above the 50-day MA of 21.74, and above the 200-day MA of 21.27, indicating a bullish trend. The MACD of 0.50 indicates Negative momentum. The RSI at 81.67 is Negative, neither overbought nor oversold. The STOCH value of 91.28 is Negative, 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 23 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 |
|---|---|---|---|---|---|---|---|
78 Outperform | $1.74B | 16.75 | 20.22% | 6.27% | 3.96% | 175.90% | |
65 Neutral | $1.32B | 520.76 | -1.27% | 2.07% | 11.32% | -92.59% | |
64 Neutral | $1.86B | 45.25 | 5.09% | ― | 58.91% | 58.36% | |
62 Neutral | $1.46B | 44.55 | 9.51% | ― | 37.90% | 15.84% | |
60 Neutral | $1.73B | 22.31 | 5.21% | ― | 3.34% | -69.26% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
49 Neutral | $2.93B | -2.53 | -50.02% | ― | 4.27% | -917.61% |
* Healthcare Sector Average
HCSG
Healthcare Services
25.30
6.36
33.58%
ACHC
Acadia Healthcare
31.51
8.56
37.30%
USPH
US Physical Therapy
88.53
-0.18
-0.20%
ASTH
Astrana Health
37.45
4.40
13.31%
PNTG
Pennant Group
41.88
16.62
65.80%
ARDT
Ardent Health Partners, Inc.
12.27
-2.87
-18.96%
Healthcare Services Corporate Events
Business Operations and StrategyM&A Transactions
Healthcare Services expands via NEXDINE acquisition agreement
Positive
Oct 7, 2026
On October 6, 2026, Healthcare Services Group, Inc. entered into an agreement to acquire all equity interests in NEXDINE Hospitality, comprising NexDine, LLC and Xendella, LLC, for an upfront purchase price of about $93.5 million, with possible ad...
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.