| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 80 | 12.9x | 17.8x | Top tier | |
Growth | 66 | 5.2% | 7.1% | Around median | |
Quality | 72 | 18.7% | 4.5% | Top tier | |
Safety | 88 | — | 2.6x | Top tier | |
Capital Return | 68 | — | 2.12% | Top tier | |
Momentum | 67 | 41.5% | 2.9% | Top tier | |
Sentiment | 40 | 5 | 3 | Bottom tier |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Healthcare Services Group provides contracted operational services to the long-term and post-acute care sector, with its business concentrated in the environmental services and dietary services segments. It also operates a higher education business through Campus Services Group for environmental services and Meriwether Godsey for food services; the higher education business exceeded $100 million in revenue in fiscal 2025, but remained below 10% of the company’s total revenue. Contract economics are protected through field execution and centralized purchasing, with contractual rights allowing increases in food and labor costs to be passed on to customers.
In Q2 fiscal 2026, revenue was $470.8 million and gross profit was $74.8 million, representing a gross margin of approximately 15.9%, while net income was $22.7 million and diluted earnings per share were $0.32. Operating cash flow was $21.9 million, or $27.9 million after excluding the impact of lower accrued payroll. By comparison, the company recorded revenue of $462.8 million, net income of $26.1 million, and earnings per share of $0.37 in Q1 fiscal 2026.
Dietary services represented the largest portion of the Q2 fiscal 2026 mix, with revenue of $257.6 million, or approximately 54.7% of the total, and a segment margin of 7.5%. Environmental services generated revenue of $213.2 million, or approximately 45.3% of the total, and a higher segment margin of 13.3%. Cost of services was $396 million, or 84.1% of revenue, benefiting from strong execution and bad debt expense below its historical average.
Automated analysis for informational purposes only — not investment advice.
The analyst consensus rates HCSG as Neutral, with an average target of $26.5 and a range of $24 to $30; the average is approximately 2.9% above the 52-week range high of $25.75, while the highest target is approximately 16.5% above it. The breadth of the targets and the 52-week range of $15.13 to $25.75 indicate that the valuation is sensitive to the success of revenue acceleration in the second half of fiscal 2026, the sustainability of the improvement in cost of services, and the fading of insurance reserve benefits.
Figures in the text are as of 2026-09-01; the live price is shown at the top of the page.
On July 22, 2026, management reaffirmed its expectation for mid-single-digit revenue growth in fiscal 2026 and set Q3 fiscal 2026 revenue at between $475 million and $485 million. Growth depends on developing management candidates, converting the sales pipeline, and retaining more than 90% of core business. Dietary services also represent a cross-selling opportunity because their penetration remains at approximately 50% of the environmental services customer base and because a dietary account typically generates twice the revenue of an environmental services account at the same facility.
Dietary services revenue was $257.6 million with a segment margin of 7.5%, representing approximately 54.7% of the company’s revenue. Environmental services revenue was $213.2 million with a segment margin of 13.3%, representing approximately 45.3% of the total. Accordingly, HCSG’s total revenue reached $470.8 million, with net income of $22.7 million and diluted earnings per share of $0.32.
Cost of services was $396 million, or 84.1% of revenue, in Q2 fiscal 2026, better than management’s target of approximately 86%. Strong execution and bad debt of $4.3 million, or less than 1% of revenue, contributed to this result. However, the benefit from self-insurance reserves declined to $1.3 million from more than $4.5 million in Q1 fiscal 2026, and management expects that benefit to gradually trend toward zero.
The higher education business exceeded the $100 million revenue threshold in fiscal 2025 but remained below 10% of the company’s total revenue. HCSG operates in this market through Campus Services Group for environmental services and Meriwether Godsey for food services, and it seeks to cross-sell the two offerings. The company closed a small acquisition within the business in mid-April 2026, but said its contribution to revenue in Q2 fiscal 2026 and subsequent periods was immaterial.
Management said on the July 22, 2026 call that HCSG continued providing services to Genesis facilities without disruption to operations, operating results, or payments. In January 2026, the bankruptcy court approved the sale of Genesis to 101 West State Street, a group of operators with an existing relationship with HCSG. According to management’s estimate on the call, the transaction was moving toward a close in late Q3 or early Q4 fiscal 2026, with service expected to continue without disruption through the sale date.
The company ended Q2 fiscal 2026 with $200.9 million in cash and marketable securities, in addition to a $300 million credit facility that was undrawn except for letters of credit. Management allocates capital among organic growth, acquisitions, and share repurchases, and completed a small higher education acquisition during the quarter. It also repurchased $20.9 million of shares during the quarter, bringing the fiscal 2026 total to $44.9 million under a plan targeting $75 million over 12 months beginning with the February 2026 announcement.
