BENSALEM, PA — Healthcare Services Group, Inc. (NASDAQ: HCSG) delivered its strongest quarterly revenue and cash flow performance in five years during the first quarter of 2025, highlighting significant financial momentum and growth potential.
Revenue for the quarter reached $447.7 million, marking a 5.7% year-over-year increase. Net income was reported at $17.2 million, with diluted earnings per share (EPS) of $0.23. Operating cash flow totaled $27.5 million, increasing to $32.1 million when adjusted to exclude payroll accrual changes.
Ted Wahl, Chief Executive Officer, described the results as a milestone for the company. “First quarter revenue and cash flow were our best results in five years, and we have carried that positive momentum into the second quarter. New client wins drove our organic growth, collections exceeded revenue, and we continued to strengthen our balance sheet. These favorable dynamics have positioned us to execute our 2025 growth plans, while delivering sustainable, profitable results in the year ahead.”
Healthcare Services Group reiterated its expectation of mid-single-digit revenue growth for 2025 and adjusted its cash flow from operations forecast upward, excluding payroll accrual changes, to a range of $60.0 to $75.0 million from prior guidance of $45.0 to $60.0 million.
Segment performance was also strong. Environmental Services generated revenue of $196.3 million with margins of 10.8%, while Dietary Services contributed $251.3 million with a 7.6% margin. Total costs of services stood at $379.7 million, representing 84.8% of revenue, aligning with the company’s strategic goal of maintaining these costs in the 86% range over the coming year.
General and administrative expenses (SG&A) totaled $45.0 million, or 10.4% of revenue, adjusted for changes in deferred compensation. The company intends to manage SG&A within a 9.5% to 10.5% range in the near term, with a long-term target of reducing this to 8.5% to 9.5%.
The company’s liquidity position remains robust, with $143.9 million in cash and marketable securities and access to a $500.0 million credit facility set to expire in November 2027. During the quarter, the company repurchased $7.0 million in common stock, bringing total repurchases under its 2023 authorization to over $23.0 million, with 5.4 million shares still authorized for buyback.
Looking ahead, the company sees 2025 as a pivotal year for executing its long-term strategy. With strengthened financial performance and client-driven growth, Healthcare Services Group continues to emphasize profitability and operational efficiency to deliver value to stakeholders.
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