Healthcare Services Group (HCSG) investor relations material

Executive summary

• Achieved strong Q3 results with year-over-year and sequential increases in revenue, earnings, and cash flow, driven by new client wins, high retention rates, and operational excellence.

• Revenues grew 8.5% year-over-year to $464.3 million for Q3 2025, driven by increased facility count, contractual price increases, and organic growth in Dietary services.

• Net income surged to $43.0 million in Q3 2025, aided by Employee Retention Credit (ERC) refunds and improved operating performance.

• Strategic priorities for Q4 include management development, sales pipeline conversion, facility retention, cost management, and cash flow optimization.

• Maintained positive cash collection trends and a robust balance sheet, supporting continued execution of strategic priorities.

Financial highlights

• Q3 revenue reached $464.3 million, up 8.5% over the prior year; environmental segment revenue was $211.8 million, dietary services $252.5 million.

• Net income was $43.0 million, with diluted EPS of $0.59, including a $0.36 per share benefit from ERC and Genesis adjustments.

• Cash flow from operations was $71.3 million; adjusted for payroll accrual, $87.1 million, including a $31.8 million ERC benefit.

• Adjusted EBITDA for the quarter was $56.4 million, or 12.1% of revenue, compared to $24.8 million, or 5.8%, in the prior year.

• $34.2 million in ERC refunds recognized as a reduction to costs of services provided in Q3 2025.

Outlook and guidance

• Q4 revenue estimated between $460 million and $470 million.

• Mid-single-digit top-line growth targeted for 2025 and beyond, with more details to be provided in the next earnings call.

• SG&A expected to be managed in the 9.5%-10.5% range near term, with a long-term goal of 8.5%-9.5%.

• Cost of services targeted in the 86% range for the full year.

• Capital expenditures for 2025 estimated at $5.0–$7.0 million, with $4.4 million spent through Q3.