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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 23, 2024

HEALTHCARE SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)

Commission File Number: 0-12015
Pennsylvania23-2018365
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification number)

3220 Tillman Drive, Suite 300, Bensalem, Pennsylvania
(Address of principal executive office)

19020
(Zip Code)

Registrant's telephone number, including area code: 215-639-4274
    
Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

( ☐ )    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
( ☐ )    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
( ☐ )    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
( ☐ )    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueHCSGNASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Item 2.02Results of Operations and Financial Condition.

On October 23, 2024, Healthcare Services Group, Inc. (the "Company") issued a press release (the "Press Release") announcing its earnings for the three months ended September 30, 2024. A copy of the Press Release is being furnished hereto as Exhibit 99.1 and is hereby incorporated by reference to this Current Report.

The information furnished herein, including Exhibit 99.1 shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01Financial Statements and Exhibits.

( a )    Not applicable
( b )    Not applicable
( c )    Not applicable
( d )    Exhibits.

Exhibit NumberDescription
99.1
104Cover page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HEALTHCARE SERVICES GROUP, INC.
Date: October 23, 2024By:/s/ Vikas Singh
Name: Vikas Singh
Title: Executive Vice President & Chief Financial Officer


Exhibit 99.1
HCSG Reports Q3 2024 Results
Delivers QoQ and YoY Growth In Revenue, Earnings and Cash Flow

•Revenue of $428.1 million, in line with expectations.
•Net income and diluted EPS of $14.0 million and $0.19.
•Reported and adjusted cash flow from operations of $4.3 million and $19.0 million.
•Reaffirms Q4 revenue estimate of $430.0 to $440.0 million and FY 2024 cash flow forecast of $40.0 to $55.0 million.

BENSALEM, PA--(BUSINESS WIRE)-- Healthcare Services Group, Inc. (NASDAQ:HCSG) today reported results for the three months ended September 30, 2024.

Ted Wahl, Chief Executive Officer, stated, “We’re very pleased with our third quarter results, which underscore the positive momentum we're carrying into the fourth quarter. Executing on our three strategic priorities – driving growth, managing costs, and optimizing collections – is clearly paying off, resulting in sequential and year-over-year growth in revenue, earnings, and cash flow. Looking ahead, we are confident that our focus on these priorities, supported by our strong business fundamentals, will enable us to further accelerate growth, enhance profitability, and maximize cash flow through 2025 and beyond.”

Third Quarter Results

•Revenue was reported at $428.1 million, in line with the Company’s expectations of $425.0 million to $435.0 million.
◦Housekeeping & laundry and dining & nutrition segment revenues and margins were $191.1 million and 6.4% and $237.0 million and 5.3%, respectively.
◦The Company’s Q4 expected revenue range is $430.0 to $440.0 million.
•Cost of services was reported at $364.7 million or 85.2%.
◦The Company’s goal is to continue to manage cost of services, excluding CECL, in the 86% range.
•SG&A was reported at $46.9 million; after adjusting for the $2.4 million increase in deferred compensation; actual SG&A was $44.5 million or 10.4%.
◦The Company’s goal continues to be achieving SG&A in the 8.5% to 9.5% range.
•Net income and diluted EPS were reported at $14.0 million and $0.19, respectively.
•Adjusted EBITDA was reported at $24.8 million.
•Cash flow and adjusted cash flow from operations was $4.3 million and $19.0 million, respectively.
◦The Company reaffirmed its 2024 adjusted cash flow from operations forecast in the range of $40.0 million to $55.0 million.

Balance Sheet and Liquidity

The Company’s primary sources of liquidity are cash and cash equivalents, its revolving credit facility, and cash flow from operating activities. As of the end of the third quarter, the Company had a current ratio of 2.9 to 1, cash and marketable securities of $130.0 million, and a $500.0 million credit facility (inclusive of its $200.0 million accordion), which expires in November 2027.

In 2024, the Company has repurchased over 350,000 shares, or $4.0 million, of its common stock through September 2024, including over 90,000 shares, or $1.0 million during the third quarter. Since the February 2023 share repurchase authorization, the Company has repurchased 1.4 million shares, or $15.2 million of its common stock. The Company has 6.1 million shares remaining under its authorization.

1
Exhibit 99.1
Upcoming Events and Conference Call

The Company will be participating in the UBS Global Healthcare Conference on November 13, 2024 at the Terranea Resort Hotel in Rancho Palos Verdes, CA. The Company will also be participating in the Raymond James Sonoma Small Cap Summit on November 18, 2024 at The Lodge at Sonoma in Sonoma, CA.

The Company will host a conference call on Wednesday, October 23, 2024, at 8:30 a.m. Eastern Time to discuss its results for the three months ended September 30, 2024. The call may be accessed via phone at 1 (800) 715-9871, Conference ID: 9951274. The call will be simultaneously webcast under the “Events & Presentations” section of the Investor Relations page on the Company’s website, www.hcsg.com. A replay of the webcast will also be available on the website for one year following the date of the earnings call.

About Healthcare Services Group, Inc.

Healthcare Services Group (NASDAQ: HCSG) is an experienced leader in managing housekeeping, laundry, dining, and nutritional services within the healthcare industry. With more than 45 years of experience, HCSG aims to provide improved operational, regulatory, and financial outcomes for our clients.



2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release and any schedules incorporated by reference into it may contain forward-looking statements within the meaning of federal securities laws, which are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions. Words such as “believes,” “anticipates,” “plans,” “expects,” “estimates,” “will,” “goal,” and similar expressions are intended to identify forward-looking statements. The inclusion of forward-looking statements should not be regarded as a representation by us that any of our plans will be achieved. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking information is also subject to various risks and uncertainties. Such risks and uncertainties include, but are not limited to, risks arising from our providing services to the healthcare industry and primarily providers of long-term care; the impact of and future effects of the COVID-19 pandemic or other potential pandemics; having a significant portion of our consolidated revenues contributed by one customer during the nine months ended September 30, 2024; credit and collection risks associated with the healthcare industry; the impact of bank failures; our claims experience related to workers’ compensation and general liability insurance; the effects of changes in, or interpretations of laws and regulations governing the healthcare industry, our workforce and services provided, including state and local regulations pertaining to the taxability of our services and other labor-related matters such as minimum wage increases; the Company's expectations with respect to selling, general, and administrative expense; the impacts of past or future cyber attacks or breaches; and the risk factors described in Part I of our Form 10-K for the fiscal year ended December 31, 2023 under “Government Regulation of Customers,” “Service Agreements and Collections,” and “Competition” and under Item 1A. “Risk Factors” in such Form 10-K.

These factors, in addition to delays in payments from customers and/or customers undergoing restructurings, have resulted in, and could continue to result in, significant additional bad debts in the near future. Additionally, our operating results would be adversely affected by continued inflation particularly if increases in the costs of labor and labor-related costs, materials, supplies and equipment used in performing services (including the impact of potential tariffs) cannot be passed on to our customers.

In addition, we believe that to improve our financial performance we must continue to obtain service agreements with new customers, retain and provide new services to existing customers, achieve modest price increases on current service agreements with existing customers and/or maintain internal cost reduction strategies at our various operational levels. Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies. There can be no assurance that we will be successful in that regard.

USE OF NON-GAAP FINANCIAL INFORMATION

To supplement HCSG’s consolidated financial information, which are prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”), the Company believes that certain non-GAAP financial measures are useful in evaluating operating performance and comparing such performance to other companies.

The Company is presenting adjusted cash flows used in operations, earnings before interest, taxes, depreciation and amortization (“EBITDA”) and EBITDA excluding items impacting comparability (“Adjusted EBITDA”). We cannot provide a reconciliation of forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial statements prepared in accordance with GAAP.

Company Contacts:
Theodore WahlMatthew J. McKee
President and Chief Executive OfficerChief Communications Officer
215-639-4274
investor-relations@hcsgcorp.com

3

HEALTHCARE SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
(in thousands, except per share data)

For the Three Months EndedFor the Nine Months Ended
September 30,September 30,
2024202320242023
Revenue$428,149 $411,388 $1,277,870 $1,247,549 
Operating costs and expenses:
Cost of services364,730 376,936 1,108,383 1,107,519 
Selling, general and administrative46,888 39,047 138,236 120,523 
Income (loss) from operations16,531 (4,595)31,251 19,507 
Other income, net2,277 (1,738)6,885 1,249 
Income (loss) before income taxes18,808 (6,333)38,136 20,756 
Income tax provision (benefit)4,778 (1,286)10,585 5,878 
Net income (loss)$14,030 $(5,047)$27,551 $14,878 
Basic earnings (loss) per common share$0.19 $(0.07)$0.37 $0.20 
Diluted earnings (loss) per common share$0.19 $(0.07)$0.37 $0.20 
Basic weighted average number of common shares outstanding73,687 74,364 73,822 74,446 
Diluted weighted average number of common shares outstanding73,926 74,364 74,007 74,496 

4

HEALTHCARE SERVICES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
September 30, 2024December 31, 2023
Cash and cash equivalents$27,055 $54,330 
Restricted cash equivalents1,084 — 
Marketable securities, at fair value76,776 93,131 
Restricted marketable securities, at fair value25,085 — 
Accounts and notes receivable, net406,495 383,509 
Other current assets 41,623 40,726 
Total current assets578,118 571,696 
Property and equipment, net28,435 28,774 
Notes receivable — long-term, net22,908 24,832 
Goodwill75,529 75,529 
Other intangible assets, net10,113 12,127 
Deferred compensation funding48,647 40,812 
Other assets42,091 36,882 
Total assets$805,841 $790,652 
Accrued insurance claims — current$21,510 $22,681 
Other current liabilities175,694 194,247 
Total current liabilities197,204 216,928 
Accrued insurance claims — long-term61,520 61,697 
Deferred compensation liability — long-term48,915 41,186 
Lease liability — long-term9,029 11,235 
Other long-term liabilities425 2,990 
Stockholders' equity488,748 456,616 
Total liabilities and stockholders' equity$805,841 $790,652 


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HEALTHCARE SERVICES GROUP, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(Unaudited)

Reconciliation of GAAP net income (loss) to EBITDA and adjusted EBITDA (in thousands)For the Three Months Ended September 30,For the Nine Months Ended September 30,
2024
2023(1)
2024
2023(1)
GAAP net income (loss)$14,030 $(5,047)$27,551 $14,878 
Income tax provision (benefit)4,778 (1,286)10,585 5,878 
Interest, net(6)530 132 1,119 
Depreciation and amortization(2)
3,773 3,250 10,983 10,565 
EBITDA$22,575 $(2,553)$49,251 $32,440 
Share-based compensation2,231 2,384 6,828 6,793 
(Gain)/loss on deferred compensation, net(3)
(1)(15)(40)67 
Adjusted EBITDA$24,805 $(184)$56,039 $39,300 
Adjusted EBITDA as a percentage of revenue5.8 %0.0 %4.4 %3.2 %

Reconciliation of GAAP cash flows provided by (used in) operations to adjusted cash flows provided by operations (in thousands)For the Three Months EndedFor the Nine Months Ended
September 30,September 30,
2024202320242023
GAAP cash flows provided by (used in) operations$4,312 $2,940 $(5,402)$(5,947)
Accrued payroll(4)
14,682 15,657 12,820 16,118 
Adjusted cash flows provided by operations$18,994 $18,597 $7,418 $10,171 

1.For the three and nine months ended September 30, 2023, the Company's presentation of GAAP Net Income (Loss) has been revised to reflect the impact of an accounting error related to the Company’s estimate for accrued vacation that was immaterial to the Company’s previously reported consolidated financial statements or unaudited interim condensed consolidated financial statements. The Company's presentation of EBITDA and Adjusted EBITDA have also been revised to reflect the removal of certain reconciling items between reported GAAP figures and non-GAAP figures.
2.Includes right-of-use asset depreciation of $2.0 million and $5.8 million for the three and nine months ended September 30, 2024, respectively, and $1.8 million and $4.6 million for the three and nine months ended September 30, 2023.
3.The Company offers a Supplemental Executive Retirement Plan (“SERP”) for executives and certain key employees which is also referred to as the Company’s “Deferred Compensation” plan. For SERP participants, the Company has historically retained, and anticipates continuing to retain, 100% of the funds received from SERP participants and holds such assets (the “Deferred Compensation Assets”) in a brokerage account where the investments are managed to mirror the investment elections of SERP participant holdings under such plans (the “Deferred Compensation Liabilities”). The Company’s changes in fair market value of the Deferred Compensation Assets are presented under the “Other income, net” caption on the Company’s Consolidated Statements of Comprehensive Income, however the corresponding and offsetting changes in the fair market value of the Deferred Compensation Liabilities are presented under the “Selling, general and administrative expense” caption.
4.The accrued payroll adjustment reflects changes in accrued payroll for the three and nine months ended September 30, 2024 and 2023. The Company processes payroll on set weekly and bi-weekly schedules, and the timing of payments may result in operating cash flow increases or decreases which are not indicative of the Company’s quarterly cash flow performance.
6
v3.24.3
Document
Oct. 23, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 23, 2024
Entity Registrant Name HEALTHCARE SERVICES GROUP, INC.
Entity File Number 0-12015
Entity Incorporation, State or Country Code PA
Entity Tax Identification Number 23-2018365
Entity Address, Address Line One 3220 Tillman Drive
Entity Address, Address Line Two Suite 300
Entity Address, City or Town Bensalem
Entity Address, State or Province PA
Entity Address, Postal Zip Code 19020
City Area Code 215
Local Phone Number 639-4274
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.01 par value
Trading Symbol HCSG
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0000731012
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