Healthcare Services Group revenue rises to $479.604 million in third quarter
Key Facts
Healthcare Services Group reported third-quarter 2026 revenue of $479.604 million, up from $464.338 million a year earlier, while net income fell to $24.877 million from $42.953 million. Chief Executive Ted Wahl said the company is now reaching the organic growth inflection point it had planned for, and that the results set the stage for fourth-quarter revenue of between $535 million and $545 million. The company also raised its 2027 revenue growth outlook to the low single digits, from the mid-single digits. The acquisition of NEXDINE Hospitality was completed during the month, in a move the company expects to add more than $150 million annually. The results therefore place revenue growth and expected expansion alongside a decline in quarterly profitability.
Diluted earnings per share were $0.36 in the third quarter, compared with $0.59 in the same period of 2025, alongside the decline in net income. For the first nine months of the year, revenue rose to $1,413.178 million from $1,370.491 million, and net income climbed to $73.633 million from $27.815 million. The comparison shows a different trajectory for the longer period than for the standalone quarter: revenue growth continued, but quarterly net income declined year over year. In the second quarter, revenue was $470.8 million, up 2.7% from $458.5 million a year earlier. The company said at the time that customer gains and retention, higher contractual pricing and increased costs passed on to customers supported growth in both sectors.
Environmental services generated revenue of $217.2 million and a margin of 13.3%, while food services revenue was $262.4 million, with a margin of 8.7%. Cost of services was $399.2 million, equal to 83.2% of revenue, compared with the company's target of managing that cost at about 86%. Wahl said the quarter's results reflected strong business fundamentals and disciplined operational execution. Investing.com reported that new customer gains and a retention rate above 90% in the core business supported revenue, which posted its ninth consecutive quarterly increase. These factors are consistent with the company's description of organic growth, while the two sectors' margins highlight the differing contributions of environmental and food services.
The company completed its acquisition of NEXDINE Hospitality on October 6 for an initial cash purchase price of $93.5 million. It expects the acquired company to generate more than $150 million in annual revenue, with margins similar to those of Healthcare Services Group, and expects the acquisition to be immediately accretive to earnings. On liquidity, cash and marketable securities totaled $204.3 million at quarter-end, alongside an unused $300 million credit facility. The company repurchased $11.7 million of shares during the quarter, bringing purchases since the start of the year to $56.6 million. These purchases are part of a $75 million plan running through January 2027.
The quarter's results included an estimated recovery of $6.1 million related to the Genesis bankruptcy case, after the court approved its sale to 101 W. State Street on October 14. The company noted that a larger recovery was possible, but its terms had not yet become clear. In trading on October 26, HCSG shares closed at $25.12. Before that, according to an Investing.com report published on October 21, the stock rose 1.4% in premarket trading to $21.8, compared with a previous close of $21.5. The company's upcoming events include the UBS Global Healthcare Conference on November 9, the annual Stephens Investment Conference on November 18, and the Evercore Healthcare Conference on December 1, 2026.