Healthcare Services Group (HCSG) investor relations material

Executive summary

• Full-year revenue reached $1.84 billion, up 7.1% year-over-year, with Q4 revenue at $466.7 million, up 6.6% from the prior year.

• Net income for the year was $59.1 million ($0.81 EPS), and $31.2 million ($0.44 EPS) for Q4, including an $8.3 million ($0.12 per share) tax benefit from ERC receipts.

• Cash flow from operations totaled $145.0 million for the year and $17.4 million for Q4; adjusted for payroll accrual, $164.1 million and $36.4 million, respectively.

• Completed a $50 million share repurchase plan five months early; $61.6 million repurchased in 2025.

• Industry fundamentals remain strong, supported by demographic trends and stable operating conditions.

Financial highlights

• Environmental Services segment revenue was $210.8 million with a 12.6% margin; Dietary Services revenue was $255.9 million with a 7.2% margin in Q4.

• Cost of services for Q4 was $394.6 million (84.6% of revenue); SG&A was $46.2 million (9.8% of revenue, adjusted).

• Cash and marketable securities at year-end totaled $203.9 million; $300 million credit facility undrawn.

• Effective tax rate was a 9.4% benefit for Q4 and 13.0% expense for the year, including an $8.3 million benefit from Employee Retention Credits.

• Adjusted EBITDA for the year was $82.6 million (4.5% of revenue), up from $76.3 million (4.4%) in 2024.

Outlook and guidance

• 2026 revenue expected to grow at a mid-single-digit rate, with Q1 revenue projected at $460–$465 million and sequential growth through the year.

• Cost of services targeted at 86% of revenue; SG&A targeted at 9.5–10.5%, with a longer-term goal of 8.5–9.5%.

• Effective tax rate for 2026 expected to be approximately 25%.

• Net income expected to remain a strong proxy for cash flow from operations.