Healthcare Services Stock Gains After Q1 Earnings Beat

Healthcare Services Group, Inc. HCSG reported first-quarter FY22 revenue growth of 4.7% year-over-year to $426.8 million, beating the consensus of $424.77 million.
Segment revenue: Housekeeping & Laundry $201.7 million and Dining & Nutrition $225.1 million.
Operating profit declined by 42.8% Y/Y to $17.81 million, and the margin contracted by 346 bps to 4.2%.
EPS was $0.15, above the consensus of $0.06.
Housekeeping & laundry and dining & nutrition segment margins were 10.1% and 4.2%, respectively.
Cash outflow from operations for the quarter was $30.2 million.
Dividend: HCSG declared a quarterly cash dividend of $0.2125 per common share, payable on June 24, 2022, to shareholders of record on May 20, 2022.
"We remain actively engaged with our customers to modify our service agreements to adjust for the extraordinary inflation experienced over the past year, as well as account for future inflation on a real-time basis. We expect these service agreement modifications to be completed by the end of Q2, with a goal of exiting the year with cost of services in line with our historical target of 86%," commented CEO Ted Wahl.
Price Action: HCSG shares are trading higher by 3.55% at $17.19 during the pre-market session on Wednesday.

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