Third quarter 2026
Filed Oct 21, 2026Healthcare Services Group reported third-quarter revenue of $479.6 million, net income of $24.9 million and diluted EPS of $0.36, while raising its 2027 revenue growth outlook to low double-digits.
Third-quarter revenue increased versus the prior-year period, but operating income, net income, EPS, EBITDA, adjusted EBITDA and operating cash flow were lower. The company raised its 2027 revenue growth outlook and provided fourth-quarter revenue guidance of $535 to $545 million.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended September 30, 2026GAAP | $479.6M | – | – |
| Revenue, nine months ended September 30, 2026GAAP | $1.41B | – | – |
| Cost of services, three months ended September 30, 2026GAAP | $399.2M | – | – |
| Cost of services as a percentage of revenue, three months ended September 30, 2026GAAP | 83.2% | – | – |
| Cost of services, nine months ended September 30, 2026GAAP | $1.18B | – | – |
| Selling, general and administrative expense, three months ended September 30, 2026GAAP | $48.5M | – | – |
| Adjusted selling, general and administrative expense, three months ended September 30, 2026non-GAAP | $49.1 million or 10.2% | – | – |
| Selling, general and administrative expense, nine months ended September 30, 2026GAAP | $143.0M | – | – |
| Income from operations, three months ended September 30, 2026GAAP | $31.94M | – | – |
| Income from operations, nine months ended September 30, 2026GAAP | $87.98M | – | – |
| Other income, net, three months ended September 30, 2026GAAP | $1.79M | – | – |
| Other income, net, nine months ended September 30, 2026GAAP | $11.29M | – | – |
| Income before income taxes, three months ended September 30, 2026GAAP | $33.73M | – | – |
| Income before income taxes, nine months ended September 30, 2026GAAP | $99.27M | – | – |
| Income tax provision, three months ended September 30, 2026GAAP | $8.85M | – | – |
| Effective tax rate, three months ended September 30, 2026GAAP | 26.2% | – | – |
| Income tax provision, nine months ended September 30, 2026GAAP | $25.64M | – | – |
| Net income, three months ended September 30, 2026GAAP | $24.9M | – | – |
| Net income, nine months ended September 30, 2026GAAP | $73.63M | – | – |
| Basic net income per common share, three months ended September 30, 2026GAAP | $0.37 | – | – |
| Diluted net income per common share, three months ended September 30, 2026GAAP | $0.36 | – | – |
| Basic net income per common share, nine months ended September 30, 2026GAAP | $1.07 | – | – |
| Diluted net income per common share, nine months ended September 30, 2026GAAP | $1.05 | – | – |
| Weighted-average common shares outstanding, basic, three months ended September 30, 2026GAAP | 68.00M | – | – |
| Weighted-average common shares outstanding, diluted, three months ended September 30, 2026GAAP | 69.38M | – | – |
| Weighted-average common shares outstanding, basic, nine months ended September 30, 2026GAAP | 68.87M | – | – |
| Weighted-average common shares outstanding, diluted, nine months ended September 30, 2026GAAP | 70.11M | – | – |
| EBITDA, three months ended September 30, 2026non-GAAP | $35.62M | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $38.56M | – | – |
| Adjusted EBITDA as a percentage of revenue, three months ended September 30, 2026non-GAAP | 8.0% | – | – |
| EBITDA, nine months ended September 30, 2026non-GAAP | $104.5M | – | – |
| Adjusted EBITDA, nine months ended September 30, 2026non-GAAP | $113.0M | – | – |
| Adjusted EBITDA as a percentage of revenue, nine months ended September 30, 2026non-GAAP | 8.0% | – | – |
| GAAP cash from operations, three months ended September 30, 2026GAAP | $30.2M | – | – |
| Cash flow from operations excluding the change in payroll accrual, three months ended September 30, 2026non-GAAP | $20.7M | – | – |
| GAAP cash from operations, nine months ended September 30, 2026GAAP | $95.77M | – | – |
| Cash flow from operations excluding the change in payroll accrual, nine months ended September 30, 2026non-GAAP | $71.98M | – | – |
| Environmental Services segment margin, three months ended September 30, 2026other | 13.3% | – | – |
| Dietary Services segment margin, three months ended September 30, 2026other | 8.7% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Environmental ServicesNot provided in the release. | $217.2M | – | – |
| Dietary ServicesNot provided in the release. | $262.4M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fourth quarter 2026 and full-year 2026; 2027 outlook outlook
- RevenueFourth quarter revenue in the range of $535 to $545 million
- Operating expensesCost of services goal of the 86% range; SG&A goal of the 9.5% to 10.5% range, with a longer-term goal of the 8.5% to 9.5% range
- Tax rateapproximately 25.0%
- Note2027 revenue growth outlook: low double-digits
- NoteThe Company expects NEXDINE Hospitality to contribute over $150 million in annual revenue at comparable margins to the Company’s while being immediately accretive to earnings.
Capital returns
- The Company repurchased $11.7 million of common stock during the third quarter.
- Year to date, the Company has repurchased $56.6 million of common stock.
- Under its February 2026 plan, the Company may repurchase $75.0 million of common stock through January 2027.
- The Company had 7.7 million shares remaining under its authorization.
What drove it
- The company stated that third-quarter results reflected underlying business fundamentals and disciplined operational execution.
- Management said the planned organic growth inflection is being delivered.
- On October 6, 2026, the company completed the acquisition of NEXDINE Hospitality for an upfront purchase price of $93.5 million, funded with cash on hand.
- NEXDINE Hospitality is expected to contribute over $150 million in annual revenue at comparable margins to the Company’s while being immediately accretive to earnings.
- The company recorded an estimated recovery of $6.1 million following developments in the Genesis Bankruptcy case, including the court-approved sale of Genesis to 101 W. State Street on October 14, 2026.
Concerns
- Income from operations was $31,937 (in thousands) in the third quarter of 2026, compared with $45,864 (in thousands) in the third quarter of 2025.
- Net income was $24.9 million and diluted EPS was $0.36, compared with $42,953 (in thousands) and $0.59, respectively, in the prior-year quarter.
- Adjusted EBITDA was $38,560 (in thousands), and adjusted EBITDA as a percentage of revenue was 8.0%, compared with $56,393 (in thousands) and 12.1%, respectively, in the prior-year quarter.
- GAAP cash from operations was $30.2 million, compared with $71,293 (in thousands) in the prior-year quarter. Cash flow from operations excluding the change in payroll accrual was $20.7 million, compared with $87,092 (in thousands).
- The release states that the potential upper-range Genesis recovery remains subject to variables and contingencies that are not known and cannot be reasonably estimated.
- The company cited risks related to healthcare customer credit and collections, customer restructurings, labor and labor-related costs, inflation, potential tariffs, insurance claims and cybersecurity.
What to watch
- Delivery against fourth-quarter revenue guidance of $535 to $545 million.
- Execution and revenue contribution from NEXDINE Hospitality following its October 6, 2026 acquisition.
- Progress toward the low double-digit 2027 revenue growth outlook.
- Cost of services relative to the Company’s goal of the 86% range.
- SG&A relative to the Company’s goal of the 9.5% to 10.5% range.
- Resolution of Genesis Bankruptcy variables and contingencies affecting the potential recovery.
Balance sheet and cash flow
- Cash and cash equivalents were $134,598 (in thousands) as of September 30, 2026, compared with $125,189 (in thousands) as of December 31, 2025.
- Marketable securities, at fair value, were $34,223 (in thousands) as of September 30, 2026, compared with $42,774 (in thousands) as of December 31, 2025.
- Cash and marketable securities were $204.3 million as of the end of the third quarter.
- The Company had an unutilized $300.0 million credit facility as of the end of the third quarter.
- Total assets were $850,398 (in thousands) as of September 30, 2026, compared with $794,253 (in thousands) as of December 31, 2025.
- Stockholders' equity was $531,451 (in thousands) as of September 30, 2026, compared with $510,210 (in thousands) as of December 31, 2025.
- GAAP cash from operations was $30.2 million for the three months ended September 30, 2026.
- Cash flow from operations excluding the change in payroll accrual was $20.7 million for the three months ended September 30, 2026.
- The change in accrued payroll was $(9,491) (in thousands) for the three months ended September 30, 2026.
Analysis
Healthcare Services Group generated third-quarter revenue of $479.6 million, compared with $464,338 (in thousands) in the prior-year quarter. Environmental Services revenue was $217.2 million, with a 13.3% segment margin, while Dietary Services revenue was $262.4 million, with an 8.7% segment margin. Management characterized the period as an organic growth inflection and cited demand across healthcare, senior living and campus environments.
Reported profitability was lower than in the prior-year quarter. Income from operations was $31,937 (in thousands), compared with $45,864 (in thousands), and net income was $24.9 million, compared with $42,953 (in thousands). Diluted EPS was $0.36, compared with $0.59. Adjusted EBITDA was $38,560 (in thousands), compared with $56,393 (in thousands), while adjusted EBITDA as a percentage of revenue was 8.0%, compared with 12.1%.
Cost of services was $399.2 million, or 83.2% of revenue. SG&A was $48.5 million; after adjusting for the $0.6 million decrease in deferred compensation, SG&A was $49.1 million, or 10.2%. The company stated goals to manage cost of services in the 86% range and SG&A in the 9.5% to 10.5% range, with a longer-term SG&A objective of the 8.5% to 9.5% range. The effective tax rate was 26.2%, and management expects the full-year effective tax rate to be approximately 25.0%.
Cash flow from operations was $30.2 million, compared with $71,293 (in thousands) in the prior-year quarter. Excluding the $9.5 million increase in the payroll accrual, cash flow from operations was $20.7 million, compared with $87,092 (in thousands). The company ended the quarter with $204.3 million of cash and marketable securities and an unutilized $300.0 million credit facility. It repurchased $11.7 million of common stock in the third quarter and $56.6 million year to date.
The October 6 acquisition of NEXDINE Hospitality was funded with cash on hand through a $93.5 million upfront purchase price. Management expects NEXDINE to contribute over $150 million in annual revenue at comparable margins to the Company’s and to be immediately accretive to earnings. The company also recorded an estimated Genesis recovery of $6.1 million, though it stated that a higher potential recovery remains subject to variables and contingencies that cannot be reasonably estimated. Management guided to fourth-quarter revenue of $535 to $545 million and raised its 2027 revenue growth outlook from mid single-digits to low double-digits.
Management, verbatim
Our strong third quarter results reflect the underlying strength of our business fundamentals and disciplined operational execution. The organic growth inflection we planned for, and are now delivering, sets the stage for fourth quarter revenue in the range of $535 to $545 million and low double-digit top-line growth in 2027.
Ted Wahl, Chief Executive Officer
Our acquisition of NEXDINE Hospitality in early October represents a significant milestone, deepening our health and hospitality services capabilities and unlocking new growth pathways in senior living and hospitality-driven markets. We are excited to partner with the NEXDINE team in their next phase of growth and innovation.
Ted Wahl, Chief Executive Officer
Looking ahead, the strong demand for our services, our expanded operational expertise, and extraordinary team members give us great confidence in our growth trajectory across healthcare, senior living, and campus environments.
Ted Wahl, Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported income statement, EBITDA and cash-flow metrics were not provided.
- Year-over-year percentage changes were not provided for total revenue, segments, profitability metrics, EPS or cash-flow metrics.
- Gross margin was not reported.
- Free cash flow was not reported.
- Total debt and debt maturities were not reported.
- Dividend amount or dividend policy was not reported.
- Segment prior-year revenue, prior-quarter revenue and revenue growth rates were not reported.
- Prior guidance was not provided, so no comparison of actual results with prior guidance is available.
- A numerical 2027 revenue growth range was not provided beyond the phrase "low double-digits".
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.