HEALTHCARE SERVICES GROUP INC SEC 10-Q Report

Healthcare Services Group Inc., a leading provider of housekeeping, laundry, linen, facility maintenance, and dietary services to the healthcare industry, has released its Form 10-Q report for the third quarter of 2025. The report highlights significant financial growth and operational achievements, underscoring the company's robust performance in a competitive market.

Financial Highlights

Revenues: The company reported revenues of $464.3 million, reflecting a growth from $428.1 million in the same quarter last year. This increase was driven by heightened demand in both Housekeeping and Dietary services.

Operating Costs and Expenses: Operating costs and expenses totaled $418.5 million, with a notable rise in Selling, General, and Administrative expenses to $50.5 million from $46.9 million, indicating higher operational costs.

Net Income: Net income surged to $42.9 million, a significant increase from $14.0 million in the prior year quarter, highlighting improved profitability.

Basic Income Per Common Share: Basic income per common share was $0.59, compared to $0.19 in the previous year, demonstrating enhanced earnings per share.

Diluted Income Per Common Share: Diluted income per common share also rose to $0.59, up from $0.19, consistent with the basic income per share improvement.

Business Highlights

Revenue Segments: The company operates in two primary segments: Housekeeping and Dietary. Housekeeping services accounted for approximately 45.6% of the company's revenues for the three months ended September 30, 2025, and 44.8% for the nine months ended September 30, 2025. Dietary services accounted for approximately 54.4% of the company's revenues for the three months ended September 30, 2025, and 55.2% for the nine months ended September 30, 2025.

Operational Performance: Healthcare Services Group Inc. provides management, administrative, and operating expertise to housekeeping, laundry, linen, facility maintenance, and dietary service departments, primarily within the healthcare industry. This includes nursing homes, retirement complexes, rehabilitation centers, and hospitals across the United States.

Customer Contracts: The company typically enters into renewable one-year service agreements with customers, which can be canceled by either party upon 30 to 90 days' notice after an initial period of 60 to 120 days. The company manages both full-service and management-only agreements, with the former including day-to-day management and provision of supplies.

Future Outlook: The company is organized into two reportable segments, Housekeeping and Dietary, and continues to focus on managing customer departments, including cleaning, disinfecting, sanitizing, and dietary services. The company is evaluating the impacts of the One Big Beautiful Bill Act on its income taxes, which may affect future operations.

Employee Retention Credit: During the three and nine months ended September 30, 2025, the company received significant Employee Retention Credit refunds from the IRS, which were recognized as a reduction in costs of services provided and interest income.

Goodwill and Intangible Assets: The company reported an increase in goodwill due to acquisitions, with a total of $80.1 million as of September 30, 2025. This reflects the company's strategic acquisitions to enhance its operational capabilities.

Lease Operations: The company recognizes right-of-use assets and lease liabilities for various operational needs, including automobiles, office buildings, and IT equipment, with remaining lease terms ranging from less than 1 year to 5 years.

Deferred Compensation Plan: The company offers a Supplemental Executive Retirement Plan for executives and key employees, allowing for deferrals and company matches in the form of common stock, which impacts the company's operational expenses.

SEC Filing: HEALTHCARE SERVICES GROUP INC [ HCSG ] - 10-Q - Oct. 24, 2025