HCSG lifts 2027 growth outlook, reports $479.6M quarterly revenue

Healthcare Services Group, Inc. (NASDAQ: HCSG) reported third-quarter revenue of $479.6 million and raised its 2027 revenue growth outlook from mid single-digits to low double-digits. The company, based in Bensalem, Pennsylvania, also announced the completion of its acquisition of NEXDINE Hospitality on October 6, 2026, for an upfront purchase price of $93.5 million.

Chief Executive Officer Ted Wahl stated that the strong results reflect the underlying strength of business fundamentals and disciplined operational execution. Wahl noted that the organic growth inflection sets the stage for fourth-quarter revenue in the range of $535 to $545 million. He added that the acquisition of NEXDINE Hospitality deepens the company's capabilities in health and hospitality services and unlocks new growth pathways in senior living markets.

Segment revenues for Environmental and Dietary Services were reported at $217.2 million and $262.4 million, respectively. Margins for these segments stood at 13.3% and 8.7%. Cost of services was reported at $399.2 million, or 83.2% of revenue, while the company's goal is to manage this cost in the 86% range. Selling, general, and administrative expenses (SG&A) were reported at $48.5 million; after adjusting for a $0.6 million decrease in deferred compensation, SG&A was $49.1 million, or 10.2% of revenue. The company aims to manage SG&A in the 9.5% to 10.5% range, with a longer-term goal of 8.5% to 9.5%.

Net income for the quarter was $24.9 million, resulting in diluted earnings per share of $0.36. The effective tax rate was reported at 26.2%, with the company expecting a full-year effective tax rate of approximately 25.0%. Cash flow from operations was $30.2 million, or $20.7 million after adjusting for a $9.5 million increase in the payroll accrual.

The acquisition of NEXDINE Hospitality was funded with cash on hand. NEXDINE will operate as a wholly-owned subsidiary retaining its brand identity and leadership team. The company expects NEXDINE to contribute over $150 million in annual revenue at comparable margins and to be immediately accretive to earnings.

In other developments, Healthcare Services Group recorded an estimated recovery of $6.1 million related to the Genesis Bankruptcy case following a court-approved sale to 101 W. State Street on October 14, 2026. The company noted that a substantially higher potential upper-range recovery remains subject to variables and contingencies that cannot be reasonably estimated at this time.

Under its February 2026 share repurchase plan, the company bought back $11.7 million of common stock during the third quarter. Year-to-date repurchases total $56.6 million, with 7.7 million shares remaining under the authorization to repurchase $75.0 million through January 2027.

As of the end of the third quarter, Healthcare Services Group held $204.3 million in cash and marketable securities and had an unutilized credit facility of $300.0 million.

The company will host a conference call on October 21, 2026, at 8:30 a.m. Eastern Time to discuss its results. Healthcare Services Group is also scheduled to present at the UBS Global Healthcare Conference on November 9 in Palm Beach Gardens, Florida, the Stephens Annual Investment Conference on November 18 in Nashville, Tennessee, and the 9th Annual Evercore Healthcare Conference on December 1 in Coral Gables, Florida.