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BENSALEM, Pa. - Healthcare Services Group, Inc. (NASDAQ:HCSG), a $1 billion market cap company with strong financial health according to InvestingPro analysis, announced Thursday that it expects to maintain its contractual relationship with Genesis HealthCare facilities despite Genesis filing for Chapter 11 bankruptcy protection on July 9.
HCSG currently provides services to 164 Genesis facilities and anticipates no disruption in service or payments following the bankruptcy filing. The company disclosed that its estimated accounts and notes receivable balances from Genesis, net of reserves, were $50.0 million and $14.4 million respectively as of the petition date. This exposure appears manageable given HCSG’s strong balance sheet, with InvestingPro data showing the company holds more cash than debt and maintains a healthy current ratio of 2.89.
As a result of the Genesis filing, HCSG expects to record a second quarter non-cash charge of approximately $0.62 per share and a third quarter non-cash charge of approximately $0.03 to $0.04 per share.
"We believe the root causes of this action are specific to Genesis and its legacy debt structure," said Ted Wahl, Chief Executive Officer of HCSG, in the press release statement.
Despite this development, HCSG reaffirmed its 2025 expectations of mid-single digit revenue growth and $60.0 to $75.0 million of cash flow from operations, excluding changes in payroll accrual.
The company will release its results for the quarter ended June 30, 2025, on Wednesday, July 23, before market opening, followed by a conference call at 8:30 a.m. Eastern Time.
Healthcare Services Group provides housekeeping, laundry, dining, and nutritional services within the healthcare industry. The company has shown impressive momentum with a 27.8% price return over the past six months, and according to InvestingPro’s Fair Value analysis, the stock currently appears undervalued. Subscribers can access 8 additional ProTips and comprehensive financial analysis in the Pro Research Report.
In other recent news, Healthcare Services Group reported impressive first-quarter 2025 earnings, surpassing expectations with an earnings per share of $0.23, compared to the forecasted $0.18. The company also reported revenue of $447.7 million, exceeding projections of $443.83 million, marking a 5.7% year-over-year growth. This quarter’s performance highlights the company’s strategic focus on organic growth and operational efficiency. Additionally, UBS analyst AJ Rice upgraded Healthcare Services Group’s stock from Neutral to Buy, raising the price target to $15.00, reflecting a positive outlook on the company’s future performance. The analyst anticipates a revenue growth of 5.7% in 2025, surpassing the consensus estimate of 4.8%. Furthermore, the company recently held its annual shareholder meeting, where all nine director nominees were elected, and shareholders approved the compensation of the company’s named executive officers. Grant Thornton LLP was ratified as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2025. These developments indicate strong shareholder support and confidence in the company’s management and strategic direction.
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