BENSALEM, PA — Healthcare Services Group Inc. (NASDAQ: HCSG) reaffirmed its mid-single-digit growth outlook for 2026 after reporting second-quarter revenue of $470.8 million and net income of $22.7 million, as the company continued an accelerated stock-buyback program.
Diluted earnings were 32 cents per share for the three months ended June 30, the company reported.
Healthcare Services Group provides housekeeping, laundry, dining and nutritional services to healthcare facilities. Its environmental services business generated $213.2 million in quarterly revenue with a 13.3% segment margin.
Dietary services produced $257.6 million in revenue and a 7.5% margin.
Cost of services totaled $396 million, or 84.1% of revenue, below the company’s stated management target of approximately 86%.
Selling, general and administrative expenses were $52.6 million. Excluding a $6.9 million increase in deferred compensation, those costs were $45.7 million, or 9.7% of revenue, within the company’s targeted range of 9.5% to 10.5%.
Healthcare Services Group has a longer-term objective of reducing adjusted administrative expenses to between 8.5% and 9.5% of revenue.
Other income totaled $8.8 million. Excluding the corresponding deferred-compensation adjustment, other income was $1.9 million.
The effective tax rate was 26.8% during the quarter. The company expects a full-year rate of approximately 25%.
Cash flow from operations totaled $21.9 million. Excluding a $6 million reduction in payroll accruals, operating cash flow was $27.9 million.
Healthcare Services Group ended the quarter with $200.9 million in cash and marketable securities and no borrowings under its $300 million revolving credit facility.
The company repurchased $20.9 million of its shares during the quarter, bringing purchases for the first half of 2026 to $44.9 million.
Healthcare Services Group disclosed plans in February to repurchase $75 million of common stock through January 2027. It had authorization covering an additional 8.3 million shares at the end of the second quarter.
Chief Executive Officer Ted Wahl pointed to potential growth during the second half of the year while maintaining the company’s existing forecast.
“We are reaffirming our 2026 mid-single-digit growth outlook, with a focus on realizing the substantial growth opportunities in the second half of the year and beyond,” Wahl stated.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.