Core Points - Healthcare Services Group, Inc. (HSGI) reported a data breach involving unauthorized access to its computer systems, which occurred between September 27, 2024, and October 3, 2024 [2] - The breach potentially exposed sensitive personal information of hundreds of thousands of consumers, including names, Social Security numbers, driver's license numbers, state identification numbers, and financial account information [2] - Barrack, Rodos & Bacine is investigating the breach and may pursue legal action on behalf of affected individuals [1][3] Company Summary - HSGI announced the breach on August 27, 2025, revealing that it had learned of the unauthorized access over ten months prior [2] - The investigation into the breach is ongoing, and the company is assessing the extent of the data compromised [2] - The firm Barrack, Rodos & Bacine specializes in class actions related to consumer rights and corporate misconduct, indicating a potential for legal repercussions for HSGI [5]

Group 1 - Healthcare Services Group, Inc. (HSG) announced a cybersecurity incident affecting the personal information of hundreds of thousands of individuals [1] - The data breach potentially compromised various types of personally identifiable information (PII), including names, Social Security numbers, driver's license numbers, state identification numbers, and financial account details [1] Group 2 - Lynch Carpenter, LLP is investigating claims against HSG related to the data breach, indicating potential legal repercussions for the company [2] - Individuals who received a data breach notification from HSG may be entitled to compensation, suggesting a significant impact on affected parties [2]

Group 1 - Healthcare Services (HCSG) is a stock that has shown strong year-to-date performance, returning approximately 31.1% compared to an average of 0% for Business Services stocks [4] - The Zacks Consensus Estimate for HCSG's full-year earnings has increased by 4.8% over the past 90 days, indicating improved analyst sentiment and earnings outlook [4] - HCSG currently holds a Zacks Rank of 1 (Strong Buy), suggesting it has favorable characteristics to outperform the market in the near term [3] Group 2 - The Business Services sector includes 254 individual stocks and has a Zacks Sector Rank of 6, which reflects the average Zacks Rank of stocks within the sector [2] - The Business - Services industry, which includes HCSG, consists of 26 stocks and is currently ranked 94 in the Zacks Industry Rank, with an average year-to-date gain of 8.4% [6] - Montrose Environmental (MEG), another stock in the Business Services sector, has outperformed with a year-to-date return of 47.8% and a Zacks Rank of 1 (Strong Buy) [5]

Group 1: Ardmore Shipping (ASC) - Ardmore Shipping is engaged in the ownership and operation of product and chemical tankers, carrying a Zacks Rank 1 (Strong Buy) [1] - The Zacks Consensus Estimate for Ardmore Shipping's current year earnings has increased by 2.6% over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 9.15, significantly lower than the industry average of 19.5, and possesses a Value Score of A [2] Group 2: Dillard's (DDS) - Dillard's is a large departmental store chain featuring fashion apparel and home furnishings, also carrying a Zacks Rank 1 [2] - The Zacks Consensus Estimate for Dillard's current year earnings has increased by 2.6% over the last 60 days [2] - Dillard's has a price-to-earnings ratio (P/E) of 16.25, which is lower than the industry average of 19.80, and possesses a Value Score of A [3] Group 3: Healthcare Services Group (HCSG) - Healthcare Services Group provides housekeeping, laundry, linen, facility maintenance, and food services to the healthcare industry, including nursing homes and hospitals, and carries a Zacks Rank 1 [4] - The Zacks Consensus Estimate for Healthcare Services Group's current year earnings has increased by 4.8% over the last 60 days [4] - The company has a price-to-earnings ratio (P/E) of 17.31, compared to the industry average of 21.10, and possesses a Value Score of A [5]

Group 1 - Healthcare Services (HCSG) is currently outperforming its peers in the Business Services sector, with a year-to-date gain of approximately 19.2% compared to an average loss of 0.3% for Business Services stocks [4] - The Zacks Consensus Estimate for HCSG's full-year earnings has increased by 10% over the past quarter, indicating improved analyst sentiment and a more positive earnings outlook [4] - HCSG holds a Zacks Rank of 1 (Strong Buy), suggesting a strong potential for beating the market in the near term [3] Group 2 - The Business Services group includes 256 companies and is currently ranked 8 in the Zacks Sector Rank, which measures the strength of individual sector groups [2] - Huron Consulting (HURN), another stock in the Business Services sector, has a year-to-date return of 1.8% and a Zacks Rank of 2 (Buy) [5] - The Business - Services industry, which includes HCSG, has gained an average of 15.4% this year, indicating that HCSG is performing well within its industry [6]

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited H1 2025 financial statements show a **$15.1 million** net loss, primarily due to a significant bad debt provision [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $82,818 | $56,776 | | Accounts receivable, net | $292,210 | $330,907 | | Total current assets | $532,294 | $556,652 | | Goodwill | $80,042 | $75,529 | | Total assets | $802,200 | $802,772 | | **Liabilities & Equity** | | | | Total current liabilities | $213,932 | $192,547 | | Total liabilities | $325,162 | $302,845 | | Total stockholders' equity | $477,038 | $499,927 | - Total assets remained relatively stable, while total stockholders' equity decreased by approximately **$22.9 million** from year-end 2024, primarily due to net loss and treasury stock purchases[13](index=13&type=chunk) [Consolidated Statements of Comprehensive (Loss)/Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%2FIncome) Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $458,491 | $426,288 | | Costs of services provided | $455,533 | $384,742 | | (Loss) income before taxes | $(41,888) | $(1,986) | | Net (loss) income | $(32,366) | $(1,788) | | Diluted (loss) income per share | $(0.44) | $(0.02) | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenues | $906,153 | $849,721 | | Costs of services provided | $835,224 | $743,653 | | (Loss) income before taxes | $(17,994) | $19,328 | | Net (loss) income | $(15,138) | $13,521 | | Diluted (loss) income per share | $(0.21) | $0.18 | - The company experienced a significant shift from net income in H1 2024 to a net loss in H1 2025, primarily due to a substantial increase in the 'Costs of services provided', which includes a large bad debt provision[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $56,288 | $(9,714) | | Net cash used in investing activities | $(16,820) | $(16,039) | | Net cash (used in) provided by financing activities | $(16,455) | $970 | - Cash flow from operations improved significantly to **$56.3 million** in H1 2025 from a use of **$9.7 million** in H1 2024, largely driven by a high non-cash bad debt provision of **$73.4 million** and the receipt of **$20.0 million** in deferred Employee Retention Credits (ERC)[18](index=18&type=chunk) - Financing activities used **$16.5 million** in cash, primarily for purchases of treasury stock amounting to **$14.7 million**[18](index=18&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company operates in two reportable segments: Housekeeping (laundry, linen, etc.) and Dietary department services, primarily serving the healthcare industry[27](index=27&type=chunk) - On July 9, 2025, Genesis Healthcare, Inc. filed for Chapter 11 bankruptcy, resulting in a **$61.2 million** bad debt expense recognized during the three and six months ended June 30, 2025[72](index=72&type=chunk) - During the six months ended June 30, 2025, the company received **$20.0 million** in Employee Retention Credit (ERC) refunds from the IRS, recorded as a deferred liability and not yet recognized as income[161](index=161&type=chunk) Segment Revenue and Profit (Loss) for Q2 2025 (in thousands) | Segment | Revenues | Segment Profit (Loss) | | :--- | :--- | :--- | | Housekeeping | $205,743 | $1,662 | | Dietary | $252,748 | $(25,471) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 revenue growth and liquidity, noting a **$61.2 million** bad debt expense impacted profitability [Results of Operations](index=41&type=section&id=Results%20of%20Operations) - Consolidated revenues for Q2 2025 increased by **7.6%** year-over-year, driven by a **7.7%** increase in Housekeeping and a **7.4%** increase in Dietary revenues[172](index=172&type=chunk)[177](index=177&type=chunk) - Consolidated costs of services provided for Q2 2025 increased by **18.4%** YoY, primarily due to recognizing **$61.2 million** in bad debt expense related to a large customer bankruptcy, with a **7.4%** increase excluding this impact[178](index=178&type=chunk) Segment Expenses as a % of Segment Revenue - Q2 2025 vs Q2 2024 | Segment | Key Expense | 2025 | 2024 | | :--- | :--- | :--- | :--- | | Housekeeping | Bad debt expense | 12.1% | 5.5% | | | Total segment expenses | 99.2% | 92.3% | | Dietary | Bad debt expense | 18.7% | 9.1% | | | Total segment expenses | 110.1% | 99.9% | [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had cash, cash equivalents, and marketable securities of **$134.5 million** and working capital of **$318.4 million**[210](index=210&type=chunk) - Net cash from operating activities was **$56.3 million** for the first six months of 2025, a significant improvement from a **$9.7 million** use of cash in the same period of 2024, largely due to non-cash bad debt charges and ERC refunds[211](index=211&type=chunk)[212](index=212&type=chunk) - The company repurchased **1.2 million** shares of its common stock for **$14.6 million** in the first six months of 2025 under its Repurchase Plan[215](index=215&type=chunk) - The company has a **$300 million** bank line of credit, with no borrowings as of June 30, 2025, and was in compliance with all financial covenants[217](index=217&type=chunk)[218](index=218&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company holds **$164.1 million** in cash and marketable securities, subject to interest rate risk from fixed and floating-rate investments - The company's primary market risk exposure is interest rate risk associated with its investments in fixed-rate and floating-rate securities[229](index=229&type=chunk) - As of June 30, 2025, the company had **$164.1 million** in cash and cash equivalents, restricted cash equivalents, and marketable securities[228](index=228&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal financial reporting controls were effective as of June 30, 2025, with no material changes - Management concluded that the company's internal control over financial reporting was effective as of June 30, 2025[230](index=230&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[231](index=231&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, not expecting a material adverse financial effect - The company is subject to various claims and legal actions in the ordinary course of business but does not expect them to have a material adverse effect on its financial condition[233](index=233&type=chunk) - For certain pending litigation, the company is currently unable to reasonably estimate possible losses or determine if an unfavorable outcome is probable or remote[234](index=234&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors previously disclosed in the company's 2024 Form 10-K - As of June 30, 2025, no material changes have been made to the Risk Factors disclosed in the company's 2024 Form 10-K[236](index=236&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **522,696** shares for **$7.5 million** in Q2 2025, with **4.9 million** shares remaining for repurchase Share Repurchases for Q2 2025 | Period | Shares Repurchased | Average Price Paid | Aggregate Purchase Price (in thousands) | | :--- | :--- | :--- | :--- | | April 2025 | — | $— | $— | | May 2025 | — | $— | $— | | June 2025 | 522,696 | $14.38 | $7,515 | | **Q2 Total** | **522,696** | **$14.38** | **$7,515** | - As of June 30, 2025, the company has **4.9 million** shares remaining for repurchase under its authorized Repurchase Plan[237](index=237&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or officers adopted, terminated, or modified a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[241](index=241&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and iXBRL financial data - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[242](index=242&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was reported at $458.5 million, an increase of 7.6% compared to the prior year [12] - Net loss was reported at $32.4 million, with a diluted loss per share of $0.44, which includes a non-cash charge of $0.65 per share related to the Genesis restructuring [14] - Cash flow from operations was reported at $28.8 million, and after adjustments, it was $8.5 million [14][15] - The company raised its 2025 cash flow from operations forecast from $60 million to a range of $70 million to $85 million [15] Business Line Data and Key Metrics Changes - Segment revenues for Environmental Services were reported at $205.8 million, while Dietary Services were reported at $252.7 million [12] - Segment margins for Environmental Services were reported at 0.8%, and for Dietary Services, it was negative 10.1% due to non-cash charges related to the Genesis restructuring [13] Market Data and Key Metrics Changes - The company experienced its fifth consecutive sequential revenue increase, marking the highest growth rate since Q1 2018 [7] - The company anticipates Q3 revenue in the range of $455 million to $465 million, reiterating mid-single digit growth expectations for 2025 [12][33] Company Strategy and Development Direction - The company’s strategic priorities include driving growth through management development, converting sales pipeline opportunities, and retaining existing business [10] - Plans to repurchase $50 million of common stock over the next twelve months were announced, reflecting a commitment to capital allocation and shareholder value [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the overall business environment, citing strong industry fundamentals and demographic trends supporting long-term growth [8][10] - The company views the recent Genesis Healthcare restructuring as an opportunity for stronger client facilities and improved balance sheet clarity [5][6] Other Important Information - The company is actively evaluating acquisition opportunities, although no acquisitions were completed in the quarter [17] - The company reported a strong liquidity position with cash and marketable securities totaling $164.1 million [16] Q&A Session Summary Question: Genesis situation and recovery expectations - Management confirmed that after Q3, exposure to Genesis will be effectively written off, but recovery expectations remain uncertain at this early stage [20][21] Question: Growth and retention rates - Management indicated that Q2 growth was driven by new business wins and a 90% client retention rate, which they expect to maintain [24][25] Question: Food inflation impact - Management confirmed the ability to pass through food inflation costs to clients, while also actively managing specific food item costs [27][28] Question: Guidance for revenue growth - Management reiterated mid-single digit growth guidance for 2025, despite current trends suggesting higher growth rates [33][34] Question: Collection strategy and Genesis impact - Management emphasized a focus on increasing payment frequency and leveraging promissory notes for better recovery expectations [35][36] Question: Macro environment and state healthcare budgets - Management remains optimistic about industry fundamentals despite potential state-level pressures, citing strong occupancy trends [41][42]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was reported at $458.5 million, an increase of 7.6% year-over-year [12] - Cash flow from operations was reported at $28.8 million, with an adjusted figure of $8.5 million after accounting for a $20.3 million increase in payroll accrual [14] - The company raised its 2025 cash flow from operations forecast from $60 million to a range of $70 million to $85 million [7][14] Business Line Data and Key Metrics Changes - Segment revenues for Environmental Services were reported at $205.8 million, while Dietary Services revenues were $252.7 million [12] - Segment margins for Environmental Services were reported at 0.8%, impacted by a $20.3 million non-cash charge related to Genesis restructuring [13] - Dietary Services reported a segment margin of negative 10.1%, including a $40.9 million non-cash charge related to Genesis restructuring [13] Market Data and Key Metrics Changes - The company noted steady occupancy rates and increasing workforce availability in the industry [8] - The recent industry operating trends remain positive, with a stable reimbursement environment [8] Company Strategy and Development Direction - The company’s top three strategic priorities include driving growth through management development, managing costs through operational execution, and optimizing cash flow [10] - A $50 million share repurchase plan was announced to return capital to shareholders [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the overall business environment, citing a multi-decade demographic tailwind benefiting the long-term and post-acute care system [7][10] - The company reiterated its mid-single-digit growth expectations for 2025 despite the challenges posed by Genesis restructuring [7][32] Other Important Information - Genesis Healthcare filed for Chapter 11 bankruptcy, but the company maintained its contractual relationship without disruption [5][6] - The company expects to manage SG&A expenses in the 9.5% to 10.5% range in the near term, with a long-term goal of 8.5% to 9.5% [13] Q&A Session Summary Question: Clarification on Genesis situation and recovery expectations - Management confirmed that after Q3, all exposure to Genesis will be effectively reserved, but it is still early to speculate on recovery outcomes [20][21] Question: Insights on growth and retention rates - Management highlighted that Q2 marked the fifth consecutive revenue increase, driven by new business wins and a 90% client retention rate [22][24] Question: Update on food inflation and cost management - Management stated that they have the ability to pass through food cost increases to clients and are actively managing inflation impacts [26][27] Question: Guidance for revenue growth and risks - Management reiterated mid-single-digit growth guidance due to the variability of new business ads, despite current trends suggesting higher growth [31][32] Question: Long-term outlook on Medicaid and state budgets - Management remains optimistic about industry fundamentals and demographic trends, despite potential pressures on Medicaid growth in certain states [40][41] Question: Cross-selling opportunities between Dining and Environmental Services - Management noted that cross-selling opportunities are strong, with a preference to initiate services with Environmental Services first [52][54] Question: Educational segment outlook - Management reported positive early returns in the educational segment, which remains a small but growing part of the business [56]

Core Viewpoint - Healthcare Services (HCSG) reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.20 per share, and showing an increase from $0.20 per share a year ago [1][2] Financial Performance - The company achieved revenues of $458.49 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.89% and increasing from $426.29 million year-over-year [3] - Over the last four quarters, Healthcare Services has exceeded consensus EPS estimates three times and has also topped consensus revenue estimates three times [2][3] Stock Performance - Since the beginning of the year, Healthcare Services shares have increased by approximately 12.4%, outperforming the S&P 500's gain of 7.3% [4] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $450.3 million, and for the current fiscal year, it is $0.84 on revenues of $1.8 billion [8] - The estimate revisions trend for Healthcare Services was mixed ahead of the earnings release, which may change following the recent report [7] Industry Context - The Business - Services industry, to which Healthcare Services belongs, is currently in the top 36% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

```markdown [Performance Overview and Outlook](index=1&type=section&id=Performance%20Overview%20and%20Outlook) HCSG's Q2 results surpassed growth expectations driven by new client wins and higher retention; despite a significant non-cash charge from the Genesis HealthCare restructuring impacting net income, the company raised its full-year 2025 cash flow forecast and announced a new $50.0 million share repurchase plan, signaling confidence in its strategic priorities and future growth - Q2 growth exceeded expectations due to new client wins and higher retention, with positive momentum continuing into the second half of the year[3](index=3&type=chunk) - The company reiterates its expectation for mid-single-digit revenue growth for the full year 2025[5](index=5&type=chunk)[6](index=6&type=chunk) - The **2025** cash flow from operations forecast (excluding payroll accrual changes) was raised from **$60.0-$75.0 million** to **$70.0-$85.0 million**[5](index=5&type=chunk)[13](index=13&type=chunk) - A new 12-month, **$50.0 million** share repurchase plan has been announced[1](index=1&type=chunk)[5](index=5&type=chunk) [Second Quarter Financial Performance](index=1&type=section&id=Second%20Quarter%20Financial%20Performance) HCSG's Q2 2025 revenue grew 7.6% to $458.5 million, but a $61.2 million non-cash charge from Genesis restructuring led to a $32.4 million net loss, significantly impacting cost of services and segment margins, with future targets for cost of services at 86% and SG&A between 9.5% and 10.5% Q2 2025 Key Financial Metrics | Metric | Value | Note | | :--- | :--- | :--- | | Revenue | $458.5M | +7.6% YoY | | Net (Loss) | ($32.4)M | Includes $0.65/share non-cash charge | | Diluted EPS | ($0.44) | Includes $0.65/share non-cash charge | | Cash Flow from Operations | $28.8M | - | | Adjusted Cash Flow from Ops* | $8.5M | +$10.9M YoY | Q2 2025 Revenue by Segment | Segment | Revenue (in millions) | | :--- | :--- | | Environmental Services | $205.8 | | Dietary Services | $252.7 | | **Total Revenue** | **$458.5** | - Cost of services was **99.4%** of revenue, heavily impacted by a **$61.2 million (13.4%)** non-cash charge from the Genesis restructuring. The company's goal is to manage this in the **86%** range for the second half of 2025[6](index=6&type=chunk) - SG&A was reported at **$49.2 million**. Adjusted for deferred compensation, actual SG&A was **$44.5 million** or **9.7%**. The near-term management goal is **9.5%** to **10.5%**[6](index=6&type=chunk) - Segment margins were significantly impacted by the Genesis restructuring charge: Environmental Services margin was **0.8%** and Dietary Services margin was **(10.1%)**[6](index=6&type=chunk) [Balance Sheet and Capital Allocation](index=2&type=section&id=Balance%20Sheet%20and%20Capital%20Allocation) As of Q2 end, HCSG maintained strong liquidity with $164.1 million in cash and marketable securities and a $500.0 million credit facility, accelerating its share buyback program with plans to repurchase $50.0 million in common stock over the next 12 months, reflecting a balanced capital allocation strategy - The company's liquidity sources include cash from operations, **$164.1 million** in cash and marketable securities, and a **$500.0 million** revolving credit facility expiring in November 2027[7](index=7&type=chunk) - The company plans to repurchase **$50.0 million** of its common stock over the next 12 months under its February 2023 authorization[8](index=8&type=chunk) Share Repurchase Activity | Period | Amount Repurchased | | :--- | :--- | | Q2 2025 | $7.6 million | | Year to Date 2025 | $14.6 million | - Management believes the current stock valuation offers a unique opportunity to return significant capital to shareholders via buybacks while continuing to invest in growth initiatives[9](index=9&type=chunk) [Corporate Information](index=2&type=section&id=Corporate%20Information) HCSG will host a conference call on July 23, 2025, to discuss Q2 results and present at the Baird 2025 Global Healthcare Conference in September, leveraging its nearly 50 years of experience as a leading healthcare services provider - A conference call to discuss Q2 2025 results is scheduled for Wednesday, July 23, 2025, at 8:30 a.m. Eastern Time[10](index=10&type=chunk) - The company will present at the Baird 2025 Global Healthcare Conference on September 10, 2025[11](index=11&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section provides detailed unaudited consolidated financial statements for the three and six months ended June 30, 2025, including Consolidated Statements of (Loss) Income, Condensed Consolidated Balance Sheets, and Reconciliations of Non-GAAP Financial Measures like EBITDA and adjusted cash flow from operations [Consolidated Statements of (Loss) Income](index=4&type=section&id=Consolidated%20Statements%20of%20%28Loss%29%20Income) For Q2 2025, HCSG reported revenue of $458.5 million, up from $426.3 million in the prior year, but a significant increase in cost of services resulted in an operating loss of $46.2 million and a net loss of $32.4 million, or ($0.44) per share, compared to a net loss of $1.8 million, or ($0.02) per share, in Q2 2024 Consolidated Statements of (Loss) Income (in thousands, except per share data) | | For the Three Months Ended June 30, | For the Six Months Ended June 30, | | :--- | :--- | :--- | :--- | :--- | | | **2025** | **2024** | **2025** | **2024** | | **Revenue** | **$458,491** | **$426,288** | **$906,153** | **$849,721** | | Cost of services | 455,533 | 384,742 | 835,224 | 743,653 | | Selling, general and administrative | 49,163 | 44,437 | 94,129 | 91,348 | | **(Loss) income from operations** | **(46,205)** | **(2,891)** | **(23,200)** | **14,720** | | (Loss) income before income taxes | (41,888) | (1,986) | (17,994) | 19,328 | | **Net (loss) income** | **$(32,366)** | **$(1,788)** | **$(15,138)** | **$13,521** | | **Diluted (loss) income per common share** | **$(0.44)** | **$(0.02)** | **$(0.21)** | **$0.18** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, HCSG's balance sheet shows total assets of $802.2 million, stable compared to December 31, 2024, with cash and cash equivalents increasing to $82.8 million and net accounts receivable decreasing to $292.2 million, while total liabilities increased to $325.2 million and stockholders' equity decreased to $477.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | | **June 30, 2025** | **December 31, 2024** | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $82,818 | $56,776 | | Accounts receivable, net | $292,210 | $330,907 | | Total current assets | $532,294 | $556,652 | | **Total assets** | **$802,200** | **$802,772** | | **Liabilities & Equity** | | | | Total current liabilities | $213,932 | $192,547 | | Total liabilities | $325,162 | $302,845 | | Stockholders' equity | $477,038 | $499,927 | | **Total liabilities and stockholders' equity** | **$802,200** | **$802,772** | [Reconciliations of Non-GAAP Financial Measures](index=6&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) This section reconciles GAAP net income to non-GAAP measures like EBITDA and Adjusted EBITDA, showing Q2 2025 GAAP net loss of $32.4 million reconciled to an EBITDA of ($38.9) million and an Adjusted EBITDA of ($36.3) million, also reconciling GAAP cash flow from operations to an adjusted figure of $8.5 million excluding payroll accrual changes Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA (in thousands) | | For the Three Months Ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | | GAAP net (loss) income | $(32,366) | $(1,788) | | Income tax (benefit) provision | (9,522) | (198) | | Interest, net | (1,976) | 184 | | Depreciation and amortization | 5,001 | 3,679 | | **EBITDA** | **$(38,863)** | **$1,877** | | Share-based compensation | 2,541 | 2,113 | | **Adjusted EBITDA** | **$(36,322)** | **$3,990** | Reconciliation of GAAP Cash Flow from Operations (in thousands) | | For the Three Months Ended June 30, | | :--- | :--- | :--- | | | **2025** | **2024** | | GAAP cash flows provided by (used in) operations | $28,787 | $16,319 | | Accrued payroll | (20,256) | (18,677) | | **Cash flows from operations (excluding the change in payroll accrual)** | **$8,531** | **$(2,358)** | [Disclosures](index=3&type=section&id=Disclosures) This section contains important disclosures, including cautionary statements on forward-looking information and the use of non-GAAP financial measures, identifying risks such as credit issues, inflation, and the need for new service agreements, while clarifying that non-GAAP measures like Adjusted EBITDA and adjusted cash flow from operations supplement GAAP reporting for performance evaluation - The release contains forward-looking statements based on current expectations, which are subject to various risks and uncertainties, including those related to the healthcare industry, credit risks, and regulatory changes[14](index=14&type=chunk) - Key business risks include customer payment delays, restructurings leading to bad debts, inflation impacting labor and supply costs, and the necessity of obtaining new customer agreements[15](index=15&type=chunk)[16](index=16&type=chunk) - The company uses non-GAAP financial measures, such as net cash flow from operations (excluding payroll accrual) and Adjusted EBITDA, to supplement GAAP reporting and evaluate operating performance[17](index=17&type=chunk)[18](index=18&type=chunk) ```