One-glance verdict
Undervalued
$52.19 our estimate vs market $24.32
Wall Street consensus: $26.67 (-48.9% lower than our fair-value estimate)
53% below our estimate, below the bear case
Fundamentals snapshot
Healthcare Services Group, Inc.
HCSG · NMS · Healthcare · Medical Care Facilities
Current price
$24.32
52-week range
$16.78 - $27.05
Market cap
$1.64B
Balance sheet
Healthy
35.32x Strong cushion
Net cash $150.78M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 2.3% last year.
- Reward Returns 20.4% on equity, ahead of 50% of its peers.
- Reward Free cash flow was positive in 9/10 years.
- Risk Forward P/E (19.4x) is higher than trailing (16.4x) - earnings are expected to drop.
What this company does
Healthcare Services Group, Inc.
Healthcare Services Group manages the housekeeping, laundry, and food service departments for healthcare facilities like nursing homes and hospitals. The company earns its money from long-term contracts for these essential daily operations, which creates predictable recurring revenue (income that is likely to continue in the future). This business model provides a steady stream of income because their clients need these services to function.
How the company got here
Founded in 1976, Healthcare Services Group (HCSG) started with the goal of providing essential services to healthcare facilities. For nearly five decades, it has grown into a major provider for nursing homes, retirement communities, and hospitals across the United States. The company has built its business by focusing on the specialized needs of the healthcare industry, adapting to changes and expanding its offerings over time. HCSG has established itself as a trusted partner for communities by focusing on operational excellence (running the business smoothly and efficiently) and creating a better experience for residents.
What it actually does
Think of HCSG as a specialized support crew for healthcare facilities like nursing homes and hospitals. They don't provide the medical care, but they handle crucial background tasks that keep the facilities clean, safe, and comfortable for patients and residents. This includes services like housekeeping, laundry, and preparing and serving meals. Essentially, HCSG takes over these important operational departments so the healthcare staff can focus on patient care.
Environmental Services
This is the housekeeping and laundry side of the business. Teams from this segment are responsible for cleaning and disinfecting resident rooms and common areas to maintain a safe and sanitary environment. They also handle all the laundry, from bed linens to resident's personal clothing. Healthcare facilities pay HCSG to manage these services, which helps ensure they meet regulatory standards for cleanliness and infection control.
Dietary
This part of the company focuses entirely on food and nutrition for residents. HCSG's dietary teams manage the facility's kitchen, which includes purchasing food, preparing meals, and even providing professional dietitian services. A key part of their job is creating menus that meet the specific health and dietary needs of each resident. This segment is a significant part of the company's business, helping facilities provide quality dining experiences.
What management is betting on now
The company's current strategy is centered on what they call "People, Serving, Experience." This means they are focused on their employees as their greatest asset, emphasizing excellent service, and creating positive experiences for both residents and the staff of the facilities they partner with. They are also focused on cross-selling opportunities, which means encouraging clients who use one service (like housekeeping) to also sign up for their other services (like dietary). By doing this, they aim to deepen their relationships with existing customers and continue to grow within the large market of healthcare facilities.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$34.78M
FY2025 Q1
$25.76M
FY2025 Q2
$27.43M
FY2025 Q3
$69.96M
FY2025 Q4
$16.01M
FY2026 Q1
$42.33M
FY2026 Q2
$20.24M
FY2026 Q3
$28.10M
Revenue
$479.60M
Net income
$24.88M
Diluted EPS
0.36
Operating cash flow
$30.17M
Free cash flow
$28.10M
Fetching…
Sources
Revenue
$470.81M
Net income
$22.70M
Diluted EPS
0.32
Operating cash flow
$21.87M
Free cash flow
$20.24M
Fetching…
Sources
Revenue
$462.77M
Net income
$26.06M
Diluted EPS
0.37
Operating cash flow
$43.73M
Free cash flow
$42.33M
Fetching…
Sources
Revenue
$466.68M
Net income
$31.24M
Diluted EPS
0.43
Operating cash flow
$17.39M
Free cash flow
$16.01M
Fetching…
Sources
Revenue
$464.34M
Net income
$42.95M
Diluted EPS
0.59
Operating cash flow
$71.29M
Free cash flow
$69.96M
Fetching…
Sources
Revenue
$458.49M
Net income
$-32.37M
Diluted EPS
-0.44
Operating cash flow
$28.79M
Free cash flow
$27.43M
Fetching…
Sources
Revenue
$447.66M
Net income
$17.23M
Diluted EPS
0.23
Operating cash flow
$27.50M
Free cash flow
$25.76M
Fetching…
Sources
Revenue
$437.81M
Net income
$11.92M
Diluted EPS
0.15
Operating cash flow
$36.20M
Free cash flow
$34.78M
Fetching…
Sources
Is it cheap or expensive?
Fair value $52.19 vs current price $24.32
Wall Street consensus is the average analyst price target: $26.67 (-48.9% lower than our fair-value estimate).
Our most-likely fair value is $52.19 a share — about 114.5% above today's price of $24.32, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $150.8M - more cash than debt. Interest coverage 35.3x.
Net debt
$-150.78M
Interest coverage
35.32x
Healthcare Services Group, Inc.'s profit covers its interest bill about 35.3 times over. which is stronger than every peer shown here.
Healthy
Worse cushion
Baseline
Better cushion
HCSG
BASELINE
Healthcare Services Group, Inc.
Total debt $18.04M Interest coverage 35.32x This is the baseline the peer rows are being compared against.
Total debt $6.47B Interest coverage 2.17x -94% vs HCSG Carries about 16.3x less debt cushion than HCSG.
Total debt $1.88B Interest coverage 3.37x -90% vs HCSG Carries about 10.5x less debt cushion than HCSG.
Total debt $9.13B Interest coverage 8.72x -75% vs HCSG Carries about 4.1x less debt cushion than HCSG.
Total debt $5.19B Interest coverage 4.42x -87% vs HCSG Carries about 8.0x less debt cushion than HCSG.
Total debt $2.71B Interest coverage 24.67x -30% vs HCSG Carries about 1.4x less debt cushion than HCSG.
What you should know
The case for and against HCSG
3 Rewards
1 Risk
Rewards
-
Revenue grew 2.3% last year.
-
Returns 20.4% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 9/10 years.
Risks
-
Forward P/E (19.4x) is higher than trailing (16.4x) - earnings are expected to drop.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
16.44x
Forward P/E
19.40x
P/B
3.09x
P/S
0.87x
EV/EBITDA
12.65x
PEG ratio
1.36x
Profitability
How much profit each dollar creates
Gross margin
16.1%
Operating margin
6.7%
Net margin
5.6%
ROE
20.4%
ROA
8.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.03x
Current ratio
2.82x
Quick ratio
2.44x
Total debt
$18.04M
Total cash
$168.82M
Growth
How the business has been compounding
Revenue TTM
$1.88B
Revenue 5Y CAGR
2.8%
EPS TTM
1.48
EPS 5Y CAGR
19.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$113.16M
Free CF TTM
$139.15M
FCF margin
7.4%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2022-11-17