Healthcare Services Group (HCSG) investor relations material

Executive summary

• Reported Q2 2026 revenue of $470.8 million, net income of $22.7 million, and diluted EPS of $0.32, with a significant turnaround from a net loss in the prior year quarter.

• Cash flow from operations was $21.9 million for Q2 and $65.6 million for the first half of 2026; excluding payroll accrual changes, Q2 cash flow was $27.9 million.

• Strategic priorities include growth through management development, sales pipeline conversion, retention, M&A, and share repurchases.

• Positioned for growth due to demographic trends, including a rapidly aging population and increasing demand for long-term care services.

• Focused on delivering long-term shareholder value through recurring revenues, high customer retention (>90%), and a strong balance sheet.

Financial highlights

• Q2 2026 revenue was $470.8 million, with Environmental Services segment revenue at $213.2 million (13.3% margin) and Dietary Services at $257.6 million (7.5% margin).

• Consolidated revenues for the six months ended June 30, 2026, rose to $933.6 million, with net income of $48.8 million.

• Adjusted EBITDA for Q2 2026 was $35.6 million (7.6% margin); for 2025, adjusted EBITDA was $82.6 million.

• Cash and marketable securities at quarter-end: $200.9 million; undrawn $300 million credit facility.

• Cost of services was 84.1% of revenue, below the 86% target, with SG&A at $52.6 million (adjusted to $45.7 million after deferred compensation).

Outlook and guidance

• Management reaffirmed a mid-single-digit revenue growth outlook for 2026, with EBITDA margins projected at 5.5%.

• Q3 2026 revenue expected between $475 million and $485 million.

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

• Capital expenditures for 2026 estimated at $5.0–$7.0 million, with $3.0 million spent through June 30, 2026.

• Liquidity expected to remain strong, with no borrowings under the $300 million credit facility and compliance with all covenants.